Perpetuals on stocks: the SEC comes to the aid of the CFTC against Cboe and Citadel

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The heart of the complaint is contained in one sentence. For the Capital Markets Alliance, a perpetual contract on Nvidia or Tesla is a “security swap” which falls under the SEC, and the CFTC would therefore have exceeded its powers by allowing the files of Kalshi, Coinbase Derivatives and Bitnomial to pass, on November 2, without a written order.

The lobby depicts an “out of control” CFTC and an absent SEC.

It is precisely this image that the SEC brief dismantles. According to The Block, which viewed the document on November 11, the text explains why “this description, of a CFTC gone out of control and an SEC disappearing, is erroneous”.

The agency recalls that the CFTC rule changes are submitted to it for examination, that the two authorities have jointly launched a public consultation on the qualification of perpetuals, and that it “often” works with its neighbor, a collaboration that it considers vital to monitor these products.

The platforms did not wait for the regulator. On November 9, Coinbase, Kalshi, Payward (parent company of Kraken), DRW, Jump Trading and Paradigm filed their own joint brief.

Their central argument is chronology: the SEC was “at the table from the beginning.” A victory for the alliance would also close the door to the American market for these products.

Molly Abraham, Coinbase's legal director, added on

Opposite, Better Markets and former SEC Commissioner Allison Herren Lee have filed in the opposing camp and maintain that these are indeed securities swaps.

On the ground, Kalshi formalized on November 5 the launch of its perpetuals on more than 50 American stocks, with a leverage that goes up to 4.9 times depending on the securities.

Coinbase Derivatives and Bitnomial have not yet announced a comparable launch.

On November 3, the court refused an immediate suspension, while considering that the alliance had a good chance of winning on the merits. He must now rule on the request for a preliminary injunction, with no hearing date known.

The CFTC is fighting in parallel against the CME, which has been contesting Kalshi's Bitcoin perpetuals since June. Two lawsuits, two Wall Street heavyweights, and this time the two federal regulators on the same side of the bar.

Falling down the white rabbit hole in 2017, I went from avid reader to Editor-in-Chief of Journal du Coin. I like to get involved behind the scenes of projects to bring my vision of a decentralized future. A lover of beautiful letters, I coordinate our teams to transform technical complexity into human, precise information without unnecessary jargon. Between entrepreneurship and writing, my mission is clear: popularize tomorrow, but do it today.

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Machine-translated from French