- Crypto firms are lining up behind the regulator. Coinbase Global, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading and Paradigm filed a letter supporting the Commodity Futures Trading Commission in the U.S. District Court for the Southern District of New York, CoinDesk reported.
- The fight is over who regulates stock perps. The Capital Markets Alliance, which says it is backed by broker-dealers such as Cboe and Citadel Securities, sued earlier this month to challenge the CFTC’s approval of perpetual futures on individual stocks, arguing the products belong under the SEC’s jurisdiction.
- The products are already cleared to list. Applications by Coinbase, Kalshi and Payward to list the contracts, which have no expiration date unlike traditional futures, were deemed approved on Nov. 2.
- The CFTC is pushing back hard. A CFTC spokesperson called the lawsuit “troubling” when it was filed on Nov. 3, saying “our markets should be governed by law, not litigation campaigns intended to block innovation.”
What Happened?
The Capital Markets Alliance filed suit on Nov. 3 to challenge the CFTC’s approval of open-ended futures contracts tied to individual stocks, products comparable to the perpetual futures popular in crypto derivatives markets. Perpetual futures let traders bet on an asset’s future price without an expiry date. A group of crypto exchanges, prediction market Kalshi and major trading firms has now filed a letter backing the CFTC. Coinbase shares were at $130.77, according to CoinDesk.
Why It Matters?
The case pits crypto-native exchanges against parts of the traditional equities establishment over a potentially lucrative new market in stock derivatives. If the CFTC’s approval stands, firms like Coinbase and Kraken could offer equity exposure through perpetual contracts under commodities regulation, putting them in more direct competition with traditional broker-dealers and exchanges. A ruling for the CMA would push such products under the SEC and could stall the launches. The dispute also tests how far the CFTC under Chairman Mike Selig can expand its reach into products tied to securities.
What’s Next?
Investors will watch for the Southern District of New York’s response, including whether the court moves to block the contracts while the case proceeds. Whether Coinbase, Kalshi or Payward begin listing the approved contracts while the suit is pending is another key signal. The SEC’s stance on jurisdiction is another key variable.
Affected Tickers and Coins: COIN, CBOE, BTC
Source: CoinDesk
