Stock Perpetual futures can continue trading on Kalshi, Coinbase Derivatives and Bitnomial after a federal judge rejected an emergency bid to stop them. The Nov. 3 ruling leaves the exchanges’ approvals in place but signals that the plaintiffs may succeed in arguing the Commodity Futures Trading Commission exceeded its authority.
U.S. District Judge Valerie Caproni found that the Capital Markets Alliance Association was likely to prevail on its claim that the CFTC cannot authorize perpetual derivatives on individual stocks for retail investors on platforms it regulates. The New York-based nonprofit includes Cboe Global Markets, Citadel Securities and the Healthy Markets Association.
Caproni wrote that the contracts do not provide for the future sale of a single security and therefore do not appear to qualify as security futures under the CFTC’s authority. Instead, she said, they appear to meet the definition of swaps, which fall under the Securities and Exchange Commission’s jurisdiction.
The judge also said the CFTC’s actions appeared to pose a major disruption to the equities market and that the balance of equities and public interest favored the alliance. However, she denied the emergency request because the plaintiffs’ declarations did not establish that their members faced actual and imminent irreparable harm.
The decision does not resolve the lawsuit or a separate request for a preliminary injunction. The CFTC’s opposition was due Nov. 6, with the alliance’s reply scheduled for Nov. 10, subject to changes by the judge assigned to the case. Kalshi was listing perpetual contracts tied to Qualcomm, McDonald’s, Amgen and Costco by Wednesday morning, with maximum leverage of 4.9 times.
The dispute concerns the classification of the products. The CFTC said on Nov. 3 that the contracts had been deemed approved as security futures under a rule overseen jointly with the SEC, after the exchanges filed them on Sept. 18 and the commission’s 45-day review period passed without a written order. The alliance argues that contracts without an expiration date or delivery obligation are security-based swaps, which Congress limited to national securities exchanges under full SEC oversight.
The case is part of a broader disagreement over perpetual contracts and regulatory authority. The ruling concerns stock-based products, not bitcoin or other commodities, but it could affect the framework used by crypto-focused venues to offer perpetual derivatives in the United States. A separate challenge to the CFTC’s approval of a bitcoin perpetual, brought by CME Group, remains pending in Washington.
Sources: Bitcoin Magazine.