Coinbase, Kalshi and Payward Back the CFTC on Stock…

Coinbase, Kalshi and Payward moved on Monday for leave to file an amicus brief supporting the Commodity Futures Trading Commission (CFTC), a week after a federal judge told the agency it had probably exceeded its authority in clearing stock perpetual futures for US exchanges. DRW Holdings, Jump Trading and Paradigm signed the same motion.

Judge Valerie Caproni refused to halt trading on 3 November while finding the challengers likely to win on the merits, and the plaintiffs’ reply brief in the preliminary injunction fight is due today. The six firms are therefore defending a position the court has already leaned against.

Judge Caproni Already Said the CFTC Likely Overstepped

The Capital Markets Alliance Association filed suit in the Southern District of New York on 3 November at 12:09pm, naming both the CFTC and its chairman Michael Selig as defendants, under docket 1:26-cv-09608. The complaint attaches Selig’s statement of the same date and the challenged exchange filings, which are dated 18 September.

Caproni denied the emergency restraining order that day, and the reasoning is harder on the agency than the outcome suggests. She found the alliance had not shown actual and imminent irreparable harm, which is why trading continues. She also found it likely to succeed on the claim that the CFTC exceeded its statutory authority, and held that the balance of equities and the public interest favored the challengers. Stock perpetual futures are trading on a finding that went against the regulator who allowed them.

Stock Perpetual Futures Were Deemed Approved Rather Than Approved

Stock perpetual futures reached US exchanges through CFTC Regulation 40.3, under which a filing takes effect if the agency does not act within the review window. There was no separately published approval order, which is the gap the complaint is built around. Stock perpetual futures therefore exist because a clock ran out rather than because anyone signed anything.

That procedural route explains why the complaint reads as a challenge to process rather than policy. The alliance argues under the Administrative Procedure Act that the CFTC never explained its decision, never acknowledged its own longstanding treatment of perpetual derivatives as swaps, and never weighed the effects on investors and securities markets. An agency that gave no reasons is harder to defend than one that gave bad ones.

Investor Takeaway

Six Firms Signed the Brief and Three Hold the Approvals

The approvals under challenge cover KalshiEX, Bitnomial Exchange and Coinbase Derivatives, three venues in all. Two of those three signed Monday’s motion, alongside Payward, which owns Kraken and had applied to list stock perpetual futures, and three trading and investment firms with no listings of their own in the case.

Their argument goes directly to the process that the complaint describes as an empty one. The brief says the Securities and Exchange Commission was “at the table from the very start” of the rulemaking, and that the two agencies jointly sought public comment on whether perpetual contracts should be classified as security futures. Coinbase general counsel Molly Abraham wrote that security futures are not swaps under the Commodity Exchange Act or the securities futures framework Congress built in 2000.

Ryan VanGrack, Coinbase’s vice chairman, put the commercial case plainly, saying global markets already trade equity perpetuals and that US investors “deserve access to these markets under the strong consumer protections” that joint CFTC and SEC oversight provides.

Cboe and Citadel Securities Are on the Other Side

The Capital Markets Alliance describes itself as representing exchanges, market makers, broker-dealers, investors and data providers, and its named members include Cboe Global Markets, Citadel Securities and the Healthy Markets Association. Adam Ford, the alliance secretary, said that “the hasty roll out of financial products that circumvent well-established regulatory frameworks erodes investor protection.”

The dispute therefore sets incumbent equity market infrastructure against crypto-native venues over which regulator writes the rules for stock perpetual futures, a product both sides want to list. Perpetual contracts on individual US stocks became available on registered exchanges only last week.

Stock Perpetual Futures Now Turn on a Reply Due Today

Opposition to the preliminary injunction was due on 6 November and the alliance’s reply is due on 10 November, both subject to the judge’s discretion. Nothing about stock perpetual futures is settled until Caproni rules on it. A preliminary injunction, unlike the restraining order Caproni declined, would suspend the approvals while the case proceeds and take stock perpetual futures off those three venues.

Kalshi’s position here sits alongside its other federal fight, in which the CFTC sued Utah to defend federal control over prediction markets in October. The agency is also mid-rulemaking on crypto market structure, with comments closing on 14 December, and Selig has spent recent weeks sketching out how far CFTC-regulated markets might go.

Investor Takeaway