The SEC has filed an amicus brief supporting the Commodity Futures Trading Commission in a lawsuit challenging its approval of single-stock perpetual futures. The suit was filed by the Capital Markets Alliance Association, an industry group whose members include Cboe and Citadel Securities.
The case centers on regulatory jurisdiction over a new class of derivatives tied to individual stocks and determines whether crypto-native venues like Coinbase Derivatives and Kalshi can list the product.
Understanding the Product
Traditional futures contracts expire on set dates and settle at expiration. Perpetual futures eliminate the expiration date, allowing positions to remain open indefinitely. The CFTC approved single-stock versions of these contracts after a 45-day review under Regulation 40.3, classifying them as security futures under the Commodity Futures Modernization Act of 2000.
The Capital Markets Alliance Association argues the contracts should instead be classified as security-based swaps, placing them under SEC jurisdiction. The group contends that because perpetual contracts have no expiration and create no delivery obligation, calling them futures stretches the legal definition.
Court Signal and Early Ruling
A court has already issued a mixed decision. It signaled the plaintiffs are likely to succeed in their claim that the products are security-based swaps, but denied their request for a temporary restraining order, finding they had not shown irreparable harm.
Regulatory Alignment
The SEC's support for the CFTC is notable given that security futures already sit under joint agency oversight, which is rare in US market regulation. The SEC's brief indicates both agencies are comfortable with the current arrangement.
Coinbase Derivatives and Kalshi filed briefs supporting the CFTC's approval. Better Markets and a group of former SEC officials filed opposing briefs.
Industry Divisions
The plaintiff group's membership—including established market infrastructure like Cboe and major market maker Citadel Securities—contrasts with the defenders of approval, who largely come from the crypto and prediction-market sector. Coinbase Derivatives, Kalshi, and Bitnomial Exchange operate under CFTC oversight and stand to list these contracts if the approval holds.
Regulatory Implications
If plaintiffs prevail and the contracts are classified as security-based swaps, securities rules would apply. These generally carry stricter investor protections than the current framework, potentially increasing scrutiny of how the contracts are offered and to whom. Platforms that already list these products under CFTC approval could face reworking or removal of the product line.
The definition of a future under the 2000 law will likely matter more than agency regulatory preferences in the court's final determination.
