Coinbase and Kalshi defend CFTC over stock perpetual futures

Six crypto and trading firms moved on Monday to defend a US regulator's approval of stock perpetual futures. Coinbase, Kalshi and Kraken's owner want a New York court to reject a lawsuit that could push the new contracts offshore.

Those firms asked for leave to file a friend-of-the-court brief supporting the Commodity Futures Trading Commission, according to filings reported this week by The Block and crypto.news. Alongside Coinbase and the prediction market Kalshi stand Payward, which owns the exchange Kraken, and three trading firms: DRW, Jump Trading and Paradigm.

A rare split inside the market

This dispute was already in the courts. On November 3, an industry body called the Capital Markets Alliance Association sued the CFTC in the Southern District of New York and asked a judge to scrap the approval. Its members include the exchange operator Cboe Global Markets and the trading firm Citadel Securities.

Now the other side has names too. Monday's filing puts six well-known firms behind the regulator. Two camps. One set of contracts.

What makes it odd is who sits where. Companies that usually compete, and that come from different corners of finance, have each picked a lane. Coinbase vice chairman Ryan VanGrack wrote on X that overseas venues already trade these products, and that, in his words, "The U.S. should lead, not cede, this space."

DRW, Jump Trading and Paradigm are not household names, but they move serious volume. The three make markets and trade derivatives, and each told the court it has an interest in where these products land. Payward's stake is more direct still. It bought the futures exchange Bitnomial earlier this year, one of the venues cleared to list the contracts.

What the contracts are, and why the label matters

Perpetual futures track an asset's price but never expire. A trader can hold a position for as long as they keep paying, or collecting, a regular funding fee that drags the contract back toward the real price. In plain terms, they let someone bet on a single stock around the clock, with no settlement day that forces the trade to close. Ordinary futures settle on a set date. These do not.

Regulators cleared the first equity versions on November 2 under Commission Regulation 40.3, treating them as security futures products. Chairman Michael Selig set out the thinking in a statement the next day. He called perpetual futures "widely sought tools for risk-management and price-discovery" and said they belong inside the agency's framework, "subject to appropriate safeguards." Only venues that are both CFTC-designated and registered with the Securities and Exchange Commission may list them.

That label is the fight. A security future falls under the joint watch of the CFTC and the SEC. A security-based swap falls to the SEC alone. The Capital Markets Alliance argues that a contract with no expiry cannot be a security future, so it must be a swap, and that the CFTC reached past its authority by clearing the products.

Both regulators say they worked together before the approval. In his statement, Selig placed the products under the Commodity Exchange Act and federal securities law at once, and he quoted SEC Chairman Paul Atkins describing the earlier treatment of such contracts as a regulatory "no man's land." Monday's brief leans on that shared history, arguing the SEC was involved from the start rather than cut out.

A judge has already leaned one way

The plaintiffs have early momentum. On November 3, US District Judge Valerie Caproni refused their request to freeze trading, finding no immediate harm. In the same order she said the firms looked likely to win on the core point, because a contract that never settles on a set date does not fit the usual meaning of a security future. To her, it looked more like a swap.

Separately, the alliance argues that the CFTC changed its position without a proper explanation, which federal law bars agencies from doing. Adam Ford, the group's secretary, said letting products trade outside settled rules could weaken the protections that cover ordinary investors.

Monday's brief takes direct aim at the judge's reading. "A security future, by definition, cannot be a swap," the six firms wrote, pointing to the securities futures rules Congress passed in 2000. Coinbase general counsel Molly Abraham, defending the filing, said the law on this was clear. Their case is that the old framework is wide enough to hold a contract without a fixed end date.

What to watch

Events moved fast. Three exchanges filed to list the contracts in September. The agency deemed them approved on November 2. The lawsuit, the chairman's statement and the judge's first order all landed on November 3. The CFTC's reply was due November 6 and the plaintiffs' response on November 10, with Monday's brief arriving in between.

That word, offshore, carries real weight here. Coinbase already holds clearance to route US customers to an overseas affiliate for crypto perpetuals. If the equity version loses its US approval, that is the likely path again: the trading continues, only not onshore, and not under the American oversight the firms say they want.

No ruling has landed yet. The court still has to decide whether to accept the brief and whether to grant the injunction the plaintiffs seek. A friendly brief is not a win, and the judge's early words cut the other way.

Watch three things from here. First, whether Judge Caproni blocks the products while the case runs, which would matter far more than any brief. Second, the SEC, which has stayed quiet in the case even as it voices general support for well-supervised markets. Third, timing: neither Coinbase nor Kalshi has said when stock perps will go live for US customers. The case is one of several testing where US crypto regulation draws the line between the two agencies.