Digital asset firm FalconX Bravo has requested that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) classify certain single-security and narrow-index perpetuals as security-based swaps. Submitted on Aug. 12, the filing explicitly includes comparable contracts offered through decentralized finance (DeFi) protocols.
Under the proposal, cash-settled perpetuals and options tied to a single security or a narrow-based security index would fall under SEC oversight when they operate outside of the joint SEC-CFTC security-futures framework. The definition covers bilateral and over-the-counter transactions, contracts on eligible venues, non-US venues, and DeFi protocols, but it does not extend to Bitcoin or general crypto perpetuals.
If adopted, the classification could trigger registration, business-conduct, transaction-reporting, capital, margin, and segregation requirements for affected dealers. Platforms could also fall within the security-based swap execution framework depending on their structure. However, FalconX noted that dealer status and duties depend on the specific participant and transaction, meaning classification would not automatically require every protocol developer or trader to register.
Additionally, FalconX asked the SEC to reduce duplicated requirements for firms already overseen by the CFTC by raising the combined-notional threshold for alternative compliance under Rule 18a-10 from 10% to 49%, while maintaining the fixed-dollar cap and SEC registration.
The public comment window for the proposal closed on Aug. 24. It follows a June policy statement from the CFTC reserving equity and narrow-index products for separate review, as well as an alternative mixed-swap proposal filed by independent researcher Amadeus Brandes. Neither submission represents agency policy, and closing the comment docket does not commit either regulator to rulemaking or alter existing jurisdictional rules.
