The regulatory dispute over perpetual futures on U.S. stocks: SEC expresses support for CFTC, pushing back against lawsuit by coalition of traditional exchanges

The SEC has backed the CFTC in defending its November 2 approval of single-stock perpetual futures against a lawsuit from the Capital Markets Alliance, a group backed by Cboe and Citadel Securities that argues the never-expiring contracts are securities-based swaps and therefore fall solely under SEC jurisdiction. The SEC told the court the alliance mischaracterizes the situation as "CFTC runaway, SEC absent," contending the exchange rules still pass through its own review and that the alliance lacks standing to sue, though it did not resolve whether the products are futures or swaps. The dispute matters because a ruling against the CFTC could curtail retail access to the contracts launched by Kalshi, Coinbase and Bitnomial, with Coinbase, Kalshi, Kraken parent Payward, DRW, Jump and Paradigm filing a joint brief arguing the products are security futures, while Better Markets and former SEC commissioner Allison Herren Lee side with the alliance. Judge Valerie Caproni denied the alliance's emergency motion on November 3 for lack of demonstrated harm but signaled it is likely to prevail on the legal characterization question, and the case is now before Judge Lorna Schofield with no hearing date set. Kalshi's products continue trading pending that ruling, and the SEC faces a December 31 deadline to decide whether to overturn the exchange rules.