Coinbase And Kalshi Back CFTC In Stock Perpetual Lawsuit

Coinbase, Kalshi, Kraken parent Payward, and three trading firms have asked a federal court to accept a legal brief supporting the Commodity Futures Trading Commission’s authority to regulate perpetual futures tied to individual U.S. stocks, according to CryptoNews.

The companies joined DRW Holdings, Jump Trading, and Paradigm Operations in defending the regulator against a lawsuit brought by the Capital Markets Alliance Association. The dispute concerns whether single-stock perpetual contracts qualify as security futures under joint CFTC and Securities and Exchange Commission oversight.

Amicus Brief And Court Proceedings

The six companies filed their proposed amicus brief in the U.S. District Court for the Southern District of New York. The alliance is challenging the CFTC’s handling of applications submitted on September 18 by Coinbase Derivatives, KalshiEX, and Bitnomial Exchange to list perpetual contracts tied to individual large-cap U.S. stocks. Those applications were deemed approved on November 2.

In their filing, the companies argued that the Commodity Exchange Act permits perpetual contracts to fit within the existing security futures framework even without a fixed expiration date, noting that a security future cannot be a swap by definition.

Judicial Scrutiny

The industry filing follows a November 3 ruling where U.S. District Judge Valerie Caproni denied the alliance's request for a temporary restraining order, finding no sufficiently immediate harm. However, the judge's preliminary assessment questioned whether perpetual derivatives satisfy the statutory definition of security futures because they lack a specified future delivery date, suggesting they may meet the definition of security-based swaps under SEC regulation.

Despite those findings, the court left the approvals in place and directed parties to continue briefing the preliminary injunction request.

Key facts

• Coinbase, Kalshi, Payward, DRW, Jump Trading, and Paradigm filed a proposed amicus brief supporting CFTC authority.
• The Capital Markets Alliance lawsuit challenges federal approvals allowing single-stock perpetual futures.
• Applications by Coinbase Derivatives, KalshiEX, and Bitnomial were deemed approved on November 2.
• Judge Valerie Caproni denied emergency relief but questioned whether perpetual contracts qualify as security futures.