Coinbase and BitMEX Founder React to Legal Dispute Over Stock Perpetuals
Arthur Hayes, co-founder of BitMEX, comments on Coinbase's legal support for the CFTC in a dispute over stock perpetual futures, while the SEC and CMAA weigh in on the regulatory implications.
Arthur Hayes, co-founder of BitMEX, expressed that he was “flattered” by Coinbase’s support for the Commodity Futures Trading Commission (CFTC) in a US legal dispute over stock perpetual futures. Hayes noted that when BitMEX launched its perpetual swap in 2016, the response from Washington was “less than warm,” but he now sees Coinbase’s defense of the product in federal court as a sign of regulatory acceptance. Coinbase and five other companies submitted a brief opposing the Capital Markets Alliance Association’s (CMAA) request to block trading in perpetual futures tied to individual stocks, which the court accepted on Tuesday (source ID: 1). [1]
The CMAA argues that stock perpetuals should be classified as security-based swaps, which face stricter restrictions on retail trading. The group cited $375 million in reported 24-hour notional trading volume for Kalshi’s stock perpetuals shortly after launch, suggesting the products are already affecting traditional stock markets. In a Tuesday court filing, the CMAA stated that the CFTC had approved the contracts without adequately explaining its decision or addressing unresolved regulatory questions (source ID: 1). [1]
The US Securities and Exchange Commission (SEC) reportedly submitted a proposed court brief opposing the CMAA’s request to temporarily halt trading in the contracts. The agency said it was reviewing the exchanges’ rules for listing the contracts but left open whether the SEC would set those rules aside or whether the contracts qualify as security futures or security-based swaps (source ID: 1). [1]
Arthur Hayes, co-founder of BitMEX, expressed that he was “flattered” by Coinbase’s support for the CFTC in a US legal dispute over stock perpetual futures. Hayes noted that when BitMEX launched its Bitcoin perpetual swap in 2016, the regulatory response was initially negative. Ten years later, Coinbase is now in federal court defending the right to offer similar perpetual futures on US stocks, a development Hayes described as a sign of regulatory acceptance (1). [1]
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The Capital Markets Alliance Association (CMAA) argues that stock perpetuals should be classified as security-based swaps, which face stricter restrictions on retail trading. The group has filed a lawsuit against the CFTC, claiming that the agency approved the contracts without adequately addressing unresolved regulatory questions or explaining its decision (1). [1]
The US Securities and Exchange Commission (SEC) reportedly submitted a proposed court brief opposing the CMAA’s request to temporarily halt trading in the contracts. The brief indicated that the SEC was reviewing the exchanges’ rules for listing the contracts but left open whether the agency would set those rules aside or determine whether the contracts qualify as security futures or security-based swaps (1). [1]
The US Securities and Exchange Commission (SEC) reportedly submitted a proposed court brief on Monday, opposing the alliance’s request to temporarily halt trading in the contracts. The agency said it was reviewing the exchanges’ rules for listing the contracts. The brief left open whether the SEC would set those rules aside and whether the contracts qualify as security futures or security-based swaps (1). [1]
In a Tuesday court filing, CMAA said that the CFTC had approved the contracts without adequately explaining its decision or addressing unresolved regulatory questions. The group also cited about $375 million in reported 24-hour notional trading volume for Kalshi’s stock perpetuals shortly after launch, claiming the products were already diverting business from traditional stock markets (1). [1]
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Stock perpetuals let traders speculate on individual share prices without owning the underlying stocks. Unlike traditional futures, the contracts have no fixed expiration date. On Nov. 3, US District Judge Valerie Caproni denied the group’s request for a temporary restraining order because it had yet to show likely irreparable harm. She found the alliance was likely to succeed on its claim that the CFTC exceeded its authority (1). [1]
Sources
Prepared with AI assistance from the cited sources.
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