Coinbase, Kalshi and Four Other Firms Back CFTC in Lawsuit Over US Stock Perpetual Futures

Coinbase, Kalshi and four other companies have asked a US federal court to accept a brief supporting the Commodity Futures Trading Commission (CFTC) in litigation concerning perpetual futures linked to single US equities.

The filing, made on Monday, puts a coalition of crypto exchanges and trading firms on the regulator's side. They face a newly formed group representing traditional market participants, which argues that the CFTC overstepped its powers when it allowed the contracts to trade.

Who is backing the regulator

The proposed amicus brief was shared by Molly Abraham, a legal representative for Coinbase, according to Cointelegraph. Alongside Coinbase and the prediction-market operator Kalshi, the signatories include Payward, the parent company of the Kraken exchange, and the trading firms DRW Holdings and Jump Trading. Paradigm Operations, a crypto investment company, is also part of the group.

An amicus brief, sometimes called a "friend of the court" filing, allows parties that are not directly involved in a case to set out arguments they believe the judge should consider. The court must agree to accept it, which is why the companies have formally requested permission.

The six firms argue that single-stock perpetual futures sit comfortably within existing US futures law. Their position aligns with that of the CFTC, which is defending its decision to allow the products onto regulated venues.

The products at the centre of the dispute

On 3 November, the CFTC announced that single-stock perpetual futures, commonly shortened to stock perps, would be permitted on American regulated venues, marking their first availability there.

Stock perps let traders take positions on the price of an individual company's shares without owning the underlying stock. Their defining feature is that they do not expire. A conventional futures contract has a set settlement date, after which a trader who wants to keep the exposure must roll into a new contract. A perpetual contract can, in principle, be held indefinitely.

Perpetual structures have long been widespread in crypto derivatives markets, where they typically use periodic payments between long and short holders to keep the contract price close to the underlying asset. Extending that design to individual equities, and offering it on US-regulated platforms, represents a notable shift in what retail traders can access domestically.

Swap or security future

The legal battle turns on how the contracts should be classified, a question that determines which regulator oversees them and how freely they can be sold to ordinary investors.

The Capital Markets Alliance Association (CMAA), a trade and advocacy group whose members include Cboe and Citadel Securities, sued the CFTC last week. It contends that because stock perps lack a fixed expiration date, they should be treated as security-based swaps.

Security-based swaps are derivatives linked to stocks or other securities and fall primarily under the jurisdiction of the Securities and Exchange Commission (SEC). They are also subject to tighter restrictions on trading by retail customers. If the CMAA's interpretation prevails, the route by which these products reached retail traders would be significantly narrowed.

The six companies backing the CFTC reject that reading. They argue that nothing in the law requires a fixed expiry for a contract to qualify as a security future. Security futures are overseen jointly by the CFTC and the SEC, and it was under this category that the CFTC permitted stock perps to trade.

The distinction may appear technical, but it carries real commercial weight. Classification governs who can trade the products, which venues can list them and which agency writes the rules.

An early setback, but trading continues

The amicus filing came days after the CFTC suffered a preliminary blow in court. Following the CMAA's complaint, US District Judge Valerie Caproni found the trade group was likely to win its argument that the agency had gone beyond the powers granted by statute in letting stock perps be traded under the security futures category.

Caproni indicated that the products looked more like swaps than security futures, which called into question the legal reasoning behind the CFTC's approval.

However, the judge declined the CMAA's request for a temporary restraining order. She found that the group had not shown it faced imminent and irreparable harm, the standard required for such emergency relief. As a result, the CFTC's trading approvals remain in force while the case continues.

This leaves an unusual situation. The products are live and legally tradable, yet a federal judge has signalled scepticism about the basis on which they were allowed. That uncertainty could weigh on how aggressively exchanges and market makers commit resources to the contracts until the court rules further.

Why the fight matters

The case could decide whether US exchanges are able to offer retail traders contracts that track individual stocks without ever expiring. That is a question with consequences well beyond the six firms that have weighed in.

The line-up of the two camps is telling. On one side are crypto-native exchanges and trading firms that have built businesses around perpetual derivatives and are keen to bring similar products to US equities. On the other is a coalition that includes a major exchange operator and one of the largest market makers in US stocks, both deeply embedded in the existing structure of equity and options trading.

The dispute therefore reflects a broader contest over who shapes the next generation of retail trading products and which regulatory regime applies to them. A ruling that stock perps are security futures would strengthen the CFTC's hand and open a path for crypto-oriented platforms to compete more directly in equity derivatives. A ruling that they are security-based swaps would push the products towards the SEC's stricter framework and could sharply limit retail access.

There are also questions about investor protection. Supporters of the products see them as a flexible way to gain exposure to individual shares. Critics are likely to point out that leveraged, non-expiring contracts can magnify losses, which is one reason security-based swaps face tougher retail restrictions in the first place.

What to watch next

The immediate procedural step is the CMAA's reply to the CFTC's opposition to a preliminary injunction, which was scheduled for filing on Tuesday. A preliminary injunction, unlike the temporary restraining order already refused, could halt trading while the full case is heard, so the outcome of that motion will be closely followed.

Key points to monitor include:

• Whether the court accepts the amicus brief from Coinbase, Kalshi and the other four firms
• How the judge rules on the CMAA's request for a preliminary injunction
• Whether the court's provisional view that stock perps resemble swaps hardens as the case proceeds
• How exchanges and market makers respond to continued legal uncertainty while the products remain available

The judge's early assessment suggests the CFTC faces an uphill task. But her refusal to grant emergency relief means stock perps will continue trading for now, and the arguments set out by the industry coalition may yet influence how the court resolves the central question of classification.