Coinbase, Kalshi Back CFTC in Landmark Stock Perpetual Futures Battle

On Monday, November 9, 2026, a formidable alliance of six financial and cryptocurrency powerhouses, including exchange giants Coinbase and Kalshi, formally moved to support the United States Commodity Futures Trading Commission (CFTC) in a pivotal legal dispute. This group has filed an amicus brief in federal court, backing the CFTC's recent decision to permit the trading of perpetual futures tied to individual US stocks.

The intervention underscores the high stakes involved in this case, which could redefine the regulatory landscape for derivatives in the United States and significantly impact the accessibility of innovative trading products for retail investors, including those keenly watching the evolution of US prediction markets.

The Core of the Dispute: What are Stock Perps?

At the heart of the legal challenge lies the nature of single-stock perpetual futures, often called 'stock perps'. These are derivative contracts that allow traders to speculate on the price movements of individual stocks without ever owning the underlying shares. Unlike traditional futures contracts, which have a defined expiration date, stock perps have no fixed expiry, enabling continuous speculation.

On November 3, 2026, the CFTC announced its approval for these products to begin trading on US-regulated exchanges. This move was quickly met with a lawsuit from the Capital Markets Alliance Association (CMAA), a newly established trade group representing traditional financial market participants, including major players like Cboe and Citadel Securities. The CMAA contends that the CFTC overstepped its authority by allowing these contracts to trade as security futures.

Why Regulatory Classification Matters

The crux of the CMAA's argument is that because stock perps lack a fixed expiration date, they should be regulated as security-based swaps. These derivatives, linked to stocks or other securities, fall primarily under the oversight of the Securities and Exchange Commission (SEC) and are subject to stricter regulations, particularly concerning retail trading.

The six companies backing the CFTC – Coinbase, Kalshi, Kraken parent Payward, and trading firms DRW Holdings, Jump Trading, and crypto investment company Paradigm Operations – vehemently disagree. According to a proposed amicus brief shared by Coinbase legal representative Molly Abraham, their argument hinges on the assertion that a fixed expiration date is not a mandatory requirement for a contract to be classified as a security future. Security futures, unlike security-based swaps, are subject to joint oversight by both the CFTC and the SEC, offering a different regulatory pathway.

This legal nuance is critical because it determines which regulatory body has primary jurisdiction and, consequently, the rules governing how these products are offered, particularly to individual traders. For firms like Coinbase and Kalshi, whose business models often involve novel financial products and a broader retail reach, the CFTC's interpretation could open new avenues for growth, as detailed in our earlier report on Coinbase's recent financial performance.

Judicial Scrutiny and Market Implications

US District Judge Valerie Caproni has already weighed in, indicating that the CMAA is likely to succeed in its claim that the CFTC exceeded its statutory authority. Judge Caproni found that the contracts appear to qualify as swaps rather than security futures, casting significant doubt on the agency’s legal interpretation. This initial finding suggests a leaning towards the SEC's jurisdiction for these products.

However, in a crucial development for the nascent market, Judge Caproni denied the CMAA’s request for a temporary restraining order. She concluded that the group had failed to demonstrate imminent and irreparable harm, a high legal bar. This decision means that despite the ongoing lawsuit and the judge’s preliminary concerns, the CFTC’s trading approvals remain in place for now, allowing stock perps to continue trading as the legal battle unfolds. This mirrors previous regulatory skirmishes in the derivatives space, such as those surrounding individual stock perpetual futures.

What This Means for Ordinary Investors

For ordinary savers and investors, particularly those in Nigeria and across Africa who increasingly engage with global financial markets, the outcome of this lawsuit carries significant implications. If stock perps are ultimately regulated as security futures under joint CFTC-SEC oversight, it could mean broader access to these instruments. This would allow retail traders to speculate on the price movements of major US companies without the capital commitment of owning shares or the time constraints of traditional futures.

Conversely, if the court sides with the CMAA and classifies them as security-based swaps, retail access could become much more restricted. This would align them with products often reserved for institutional investors or those meeting specific accreditation criteria, potentially limiting opportunities for smaller players to participate in these innovative coinbase kalshi prediction markets and other derivative offerings.

The ability to speculate on individual stocks without expiry dates offers a new tool for portfolio diversification and hedging, but also introduces complex risks. Unlike traditional stock ownership, derivatives carry amplified leverage, meaning both potential gains and losses can be significantly magnified. Understanding these risks is crucial for any investor considering engagement with such products.

What to watch

• Tuesday, November 10, 2026: CMAA is scheduled to file its reply to the CFTC’s opposition to a preliminary injunction. This filing will provide further insight into the arguments from the traditional finance sector.
• Court Rulings: Monitor further judicial decisions regarding the preliminary injunction and the full merits of the case, which will clarify the long-term regulatory status of stock perps.
• Regulatory Statements: Watch for any joint statements or guidance from the CFTC and SEC, which could indicate attempts to resolve jurisdictional ambiguities or establish new frameworks.
• Market Adoption: Observe the volume and types of participants in the stock perp market, as continued trading could influence regulatory and legislative actions.

Frequently asked questions

What is the Coinbase Kalshi partnership about?

The 'partnership' refers to Coinbase and Kalshi, alongside four other companies, jointly filing an amicus brief in federal court. They are supporting the CFTC's decision to allow single-stock perpetual futures to trade, aligning against a lawsuit brought by the Capital Markets Alliance Association.

What are single-stock perpetual futures?

Single-stock perpetual futures, or stock perps, are derivative contracts that enable traders to speculate on the price movements of individual stocks without actually owning the shares. A key feature distinguishing them from traditional futures is that they do not have a fixed expiration date.

Why is the CFTC being sued over stock perps?

The Capital Markets Alliance Association (CMAA) is suing the CFTC, arguing that the agency exceeded its statutory authority by classifying stock perps as security futures. The CMAA contends that due to their lack of a fixed expiration date, these contracts should be regulated as security-based swaps, primarily under the SEC's jurisdiction, which typically entails tighter restrictions.

What does the judge's ruling mean for trading stock perps?

A federal judge has indicated the CFTC likely overstepped its authority by allowing stock perps to trade as security futures. However, the judge denied the CMAA's request for a temporary restraining order, meaning the CFTC's trading approvals remain in place while the lawsuit proceeds, allowing these contracts to continue trading for now.