Coinbase, Kalshi and Jump Trading Urge Judge to Keep Single-Stock Perps Trading

Six crypto and trading firms, led by Coinbase and Kalshi, have asked a federal judge in New York to let perpetual futures on individual U.S. stocks keep trading, siding with the Commodity Futures Trading Commission (CFTC) against a trade group that wants the products pulled.

In a friend-of-the-court (amicus) brief filed Nov. 9, Coinbase, Kalshi, Payward (which owns Kraken and Bitnomial), DRW, Jump Trading and Paradigm urged the court to reject the preliminary injunction the Capital Markets Alliance Association is seeking. The court has already turned down the group’s bid for a temporary restraining order, the brief says.

Perpetual futures, or perps, are derivatives that never expire; regular funding payments between longs and shorts keep their price near the underlying asset’s. ARK Invest’s Lorenzo Valente saw the stock version coming. “I think you’re gonna have stock PERPs also approved,” Valente said on Unchained in October, adding that “Coinbase, Robinhood, you know, the Backpacks of the world, they’re all gonna compete there.”

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The alliance, a New York trade group whose members run stock and options exchanges, route customer orders and make markets, sued the CFTC and its chairman, Michael Selig, on Nov. 3. Its target is how the agency handled Sept. 18 applications from KalshiEX, Coinbase Derivatives and Bitnomial Exchange to list perps on single stocks. The CFTC let its 45-day review window lapse on Nov. 2 without objecting, which under its rules counts as approval. Kalshi began offering them on more than 50 U.S. stocks on Nov. 5. Kalshi’s filing alone covered 58 contracts, and Bitnomial’s named 10 stocks, including Alphabet and Microsoft, according to the complaint.

The complaint brings two counts under the Administrative Procedure Act (APA), the law that sets the rules federal agencies must follow. The first says the approvals were arbitrary and capricious: the CFTC “abruptly and inexplicably changed positions” on products it had long handled as swaps, and let the filings take effect without a written order. “The CFTC may not avoid the requirements of the APA through silence,” the alliance wrote. The second says the contracts are security-based swaps, which Congress left to the SEC, so the CFTC had no power to approve them at all. Besides undoing the approvals, the group asked the court to declare the contracts security-based swaps and to block them while the case proceeds.

Adam Ford, the alliance’s secretary, said in a statement announcing the suit that “the hasty roll out of financial products that circumvent well-established regulatory frameworks erodes investor protection and undermines the integrity and resiliency of the American financial system.”

The six companies counter that the statute treats security futures, which the CFTC and the SEC oversee jointly, as a separate category from swaps, and that equity perps qualify because the law asks only for delivery at some point in the future, not on a set date. “The one difference is an improvement: equity perpetuals do not expire,” they wrote. Ruling for the alliance, they argued, would “send equity perpetuals back offshore,” since the SEC has no framework for retail trading of exchange-listed security-based swaps. The brief also notes the SEC has not moved to cancel the exchanges’ filings.

It isn’t the first court fight over the CFTC’s perps approvals. The Chicago Mercantile Exchange (CME) sued the agency in Washington in June over its approval of Kalshi’s bitcoin perp, which opened the door to U.S.-regulated crypto perps.

Related Listen: Why a Single Word Will Decide Who Can Trade Perps in the U.S

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