The Commodity Futures Trading Commission (CFTC) cleared perpetual futures tied to individual stocks to trade on regulated U.S. exchanges on Tuesday, marking the first time this crypto-origin derivative has been approved for traditional equities.
CFTC Chairman Michael Selig said the contracts, known as equity perps, were approved under existing security-futures rules, specifically Regulation 40.3, and will be overseen by both the CFTC and the Securities and Exchange Commission (SEC). In his statement he warned that without U.S. regulation, traders are "forced to turn to offshore, and often unregulated, venues."
How we got here
Perpetual futures let traders take positions on an asset's price without owning the underlying asset and without an expiration date, often allowing positions larger than the capital committed to them. BitMEX helped popularize perps in the crypto space in 2016, and more recently Hyperliquid turned on-chain perps into a business that attracted Wall Street interest, including an investment by ICE in the tradeXYZ platform.
The regulatory path began in crypto. In May, the CFTC approved Bitcoin perpetual futures for Kalshi and gave Coinbase separate relief to provide access to certain crypto perps listed on an affiliated foreign exchange. In September, a wave of filings sought approval for equity perps: Coinbase and Kalshi each applied, Kraken-parent Payward filed through its Bitnomial exchange, and OG.com proposed contracts that could trade around the clock on weekdays. Former President Donald Trump noted at an August 19 White House event that the CFTC was working to bring Hyperliquid to the U.S. in a "fully compliant and legal fashion."
Selig did not identify which exchanges will list equity perps or when trading will begin.
The lawsuits
Two legal challenges have emerged. In June, CME Group's Chicago Mercantile Exchange sued the CFTC over its approval of cryptocurrency perpetual futures, arguing that the contracts should be regulated as swaps rather than futures and that the agency exceeded its authority. The CFTC moved to dismiss the case in September, contending that CME lacked standing because it had not demonstrated financial harm and could list similar contracts itself.
Later on Tuesday afternoon, hours after the equity-perp announcement, the Capital Markets Alliance (a coalition that includes Cboe, Citadel Securities, and Healthy Markets) filed a lawsuit seeking to overturn the approval. The alliance argues that equity perps are security-based swaps under SEC jurisdiction and that the CFTC violated the Administrative Procedure Act by failing to adequately explain its decision. The suit seeks to block the approvals while the case proceeds.
Analysis
The distinction between swaps and futures matters because swaps face stricter requirements for reporting and margin. Registration requirements are stricter too. If the contracts are classified as futures, they can operate under the existing exchange framework; if they are deemed swaps, additional regulatory burdens would apply.
The lawsuits also reflect competitive dynamics. CME, as the dominant U.S. futures exchange, may view equity perps as a potential threat to its core business, while firms such as Citadel Securities have a vested interest in the current equity-market structure. Both motivations are plausible, but they remain unverified and should be viewed as analysis rather than established fact.
Regardless of the outcome, the product itself raises questions. Perps are perpetual instruments that can amplify gains and losses by providing exposure beyond the capital committed to them, and they operate 24/7 on many crypto platforms. Extending that model to individual stocks could increase trading activity but also expose retail participants to heightened risk.
Whether any of the legal challenges succeed is uncertain. If either suit prevails, equity perps could be delayed or restructured. If both are dismissed, the most crypto-native trading product may become a standard offering on Wall Street.
Sources
- CoinDesk: CFTC clears perpetual futures on stocks, bringing crypto trading model to Wall Street
- CoinTelegraph: CFTC clears stock perpetual futures for trading on US exchanges