US Court Allows Perpetual Stock Futures Trading to Continue
Judge denies injunction request while noting the CFTC may have overstepped its regulatory authority.
A US federal judge denied a request for an immediate halt to perpetual stock futures trading on the Kalshi, Coinbase Derivatives, and Bitnomial platforms. The ruling allows these products to remain operational while the legal proceedings continue.
Judge Valerie Caproni noted that the Capital Markets Alliance Association, a group including Cboe Global Markets and Citadel Securities, presents strong arguments. She stated that the Commodity Futures Trading Commission likely exceeded its legal authority by approving these contracts for retail investors.
According to the ruling, perpetual contracts do not fit the definition of a sale for future delivery of a single security. The judge observed that these instruments appear to meet the criteria for a swap, which would place regulatory jurisdiction under the Securities and Exchange Commission.
The request for an injunction was denied because the court found the damages alleged by financial institutions were hypothetical rather than imminent. The legal dispute continues with new deadlines for filings from the involved parties until mid-November.
Regulatory uncertainty regarding the jurisdiction of these assets increases market risk by questioning the validity of financial products on derivatives platforms. The clash between federal agencies could alter capital flows between digital and traditional asset classes.
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