A federal judge in Manhattan has refused to halt the first U.S. trading in single-stock perpetual contracts, but her short order reads like a warning to the Commodity Futures Trading Commission. In the same ruling that let the products stay live, U.S. District Judge Valerie Caproni wrote that the trade group suing the agency is likely to win on its central argument: that these contracts are swaps the CFTC has no power to approve for retail traders.
The three-page order, dated November 3, denied a temporary restraining order sought by the Capital Markets Alliance Association. The group’s members include Cboe Global Markets, Citadel Securities and Healthy Markets Association. Kalshi switched the contracts on the same day.
What the judge actually said
A TRO requires likely success on the merits, irreparable harm, a favorable balance of equities and a public interest in relief. Caproni found the alliance cleared three of the four.
On the merits, she was blunt. “The perpetual contracts in question do not appear to satisfy the definition of a ‘security future,'” the order says, because a perpetual by definition does not provide for a sale for future delivery of a single security. “By contrast, such contracts appear to satisfy the definition of a swap, which are subject to regulation by the Securities and Exchange Commission, not by CFTC.”
She also found that the balance of equities and the public interest favor the plaintiff. “The CFTC’s actions seem to represent a major disruption to the equities market,” she wrote and that the public would be served by preventing it before it occurs.
The request failed on harm alone. The declarations filed by the alliance’s members were “conjectural,” according to the order, because they focused on harmful events that could occur rather than showing harm the members were likely to suffer.
The fight now moves to the request for a preliminary injunction. The CFTC’s opposition is due Friday, November 6, and the alliance’s reply is due Tuesday, November 10. The order says the schedule may be changed by the assigned district judge.
Kalshi went live anyway
The complaint, filed November 3 by Venable LLP, targets CFTC approvals of applications from KalshiEX, Coinbase Derivatives and Bitnomial. All three were submitted on September 18 and were treated as approved once the 45-day review window lapsed. The complaint says the approvals “collectively cover dozens of contracts” tied to individual stocks, and it names the CFTC and Michael Selig, described as “currently its sole Commissioner”, as defendants.
Kalshi did not wait. In an update posted late on November 3, the company said Amgen, Costco, McDonald’s and Qualcomm “are now tradable on Perpetuals,” with long or short positions and leverage. We found no live U.S. launch announcement from Coinbase Derivatives or Bitnomial as of Wednesday.
That leaves an odd result: a federal judge says the products likely sit outside the CFTC’s authority, yet retail customers can trade them on a CFTC-regulated venue.
The crypto precedent at the center of the case
For crypto traders, the notable part of the complaint is how heavily it leans on the CFTC’s own cases against offshore exchanges.
The alliance points to the agency’s 2020 lawsuit against the operators of BitMEX, which alleged that its perpetual contracts “are swaps as defined by 7 U.S.C. § 1a(47).” The CFTC won a consent order on that theory in August 2021. In its 2023 case against Binance, the agency drew a line between quarterly futures with a set expiry, which it called futures contracts, and perpetuals with no expiry, which it said “are swaps.” A federal court entered a consent order on that basis.
The complaint also quotes then-Commissioner Caroline Pham saying that “[a] swap is a swap, even by any other name” and that so-called perpetual futures “can constitute swaps.” Its reasoning is simple: if a perpetual on bitcoin is a swap, then a perpetual on a stock is a security-based swap, which falls under the SEC.
That argument cuts both ways. Kalshi’s bitcoin perpetual was approved earlier this year, and CME Group is already challenging that approval in a separate suit. If courts accept that perpetuals are swaps, the reasoning could reach beyond equities and into the crypto perps that U.S. venues have only just started listing under CFTC oversight.
Both sides dig in
Cboe said in its statement that it was not acting out of commercial self-interest. “If this were simply a commercial issue, Cboe could bring these products to market on CFTC regulated trading and clearing platforms that it operates,” the exchange said. Chief executive Craig Donohue said the CFTC’s actions “threaten to erode the regulatory framework that has protected investors and governed U.S. securities markets for more than nine decades.”
The CFTC rejected that view. A spokesperson told Reuters that the suit was troubling interference and said, “Our markets should be governed by law, not litigation campaigns intended to block innovation.”
The commercial stakes are large. The complaint says monthly stock perpetual volume on offshore crypto platforms rose more than 50-fold this year, to nearly $700 billion in August, citing industry data. For background on the approvals and the earlier objections from Wall Street groups, see our report on the CFTC clearing equity perpetual futures.
FAQ
Did the court block stock perps?
No. Judge Caproni denied the temporary restraining order because the alliance had not shown likely irreparable harm. Kalshi’s four stock contracts remain tradable while the injunction request is briefed.
Why does the ruling still matter?
The judge found that the alliance is likely to succeed in arguing that single-stock perpetuals are swaps under SEC jurisdiction, not security futures the CFTC can approve. That finding will hang over the preliminary injunction fight.
What happens next?
The CFTC must file its opposition by November 6, and the alliance replies by November 10, unless the assigned judge changes the schedule.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
