Federal Court Questions CFTC Authority Over Stock Perpetual Futures

A federal judge has denied an emergency request to halt the trading of stock perpetual futures on Kalshi, Coinbase Derivatives, and Bitnomial. While the products remain active, the court indicated that the Commodity Futures Trading Commission (CFTC) likely exceeded its statutory authority by approving them as security futures.

The court noted that perpetual contracts, which lack expiration dates and delivery obligations, do not meet the legal definition of a security future. The ruling suggests these instruments may instead constitute swaps, which fall under the exclusive regulatory jurisdiction of the Securities and Exchange Commission.

Although the request for a temporary restraining order was denied due to a lack of evidence regarding immediate, irreparable harm, the judge signaled that the plaintiffs—a group including Cboe and Citadel Securities—are likely to succeed on the merits of their case. This legal challenge highlights a significant jurisdictional conflict between federal regulators regarding the oversight of synthetic equity markets and retail-facing derivatives.