CFTC Clears Perpetual Futures on Individual Stocks for U.S. Trading

For the first time, perpetual futures tied to individual stocks may trade on exchanges regulated in the United States, the Commodity Futures Trading Commission said on Tuesday. The step carries a product that a year ago existed only on offshore crypto platforms into the equity market.

In a statement, CFTC Chairman Michael S. Selig said the contracts — which he labelled “Equity Perps” — were deemed approved as security futures products under Commission Regulation 40.3.

Listing is open to venues holding both a CFTC designated contract market registration and a notice registration with the Securities and Exchange Commission as a national securities exchange for security futures.

“This expansion marks a significant step towards allowing U.S. market participants, consistent with applicable law, to avail themselves of the advantages of perpetual futures,” Selig said. Folding the products into the agency’s framework, he added, means Americans no longer have to “turn to offshore, and often unregulated, venues.”

Three sets of rules govern the contracts: the Commodity Exchange Act, federal securities law and the rulebooks of both agencies. No exchange is named in the statement, no contracts are listed and no launch date is given.

Such details are expected to emerge from the designated contract markets themselves.

From bitcoin perps to stock perps in five months

Perpetual futures carry no expiration date. Rather than settling on a set day, longs and shorts swap periodic funding payments, which hold the contract price close to spot. That design has ruled crypto derivatives for years, and most of the volume sits on platforms beyond U.S. jurisdiction.

On May 29 the CFTC approved Kalshi’s BTCPERP, the first bitcoin perpetual listed in the U.S., and Kalshi began trading it shortly afterwards. That same day, staff issued no-action relief permitting Coinbase Financial Markets to route U.S. clients into offshore perpetual and options liquidity. September brought gold and silver perpetuals from Kalshi.

Selig called the equity contracts, in Tuesday’s statement, a continuation of that May decision “beyond digital commodities and into traditional securities.”

The legal footing is older. A joint CFTC-SEC regime for security futures products dates to the Commodity Futures Modernization Act of 2000, and on March 11 the two agencies signed a memorandum of understanding to coordinate rulemaking and enforcement.

Selig invoked both, and echoed SEC Chairman Paul S. Atkins’s characterization of security futures as marooned in a regulatory “no man’s land” for want of harmonization. Earlier in the year the agencies had laid out a joint crypto asset taxonomy.

Not everyone reads it the CFTC’s way. CME Group sued the agency in June over the Kalshi approval, contending that a contract built on exchanged funding payments amounts to a swap under Dodd-Frank rather than a future.

The case is still pending. An equity version brings the SEC’s jurisdiction into play as well, and could attract fresh objections from participants on the securities side.

The onshoring case, after Binance

The approval arrives five days after the biggest theft in crypto’s history. On Oct. 29, intruders whom TRM Labs and Chainalysis tie to North Korea’s TraderTraitor group emptied about $6.3 billion from Binance’s hot wallets in roughly 20 minutes.

Binance resumed withdrawals on Sunday and says it has restored about 95% of the affected assets.

Selig drew on the breach to argue the case he had set out in Tuesday’s statement.

He told CNBC on Oct. 30: “The real issue here is that these are unregulated offshore exchanges, and they don’t have the same sorts of safeguards that we have in our financial markets here in the United States.”

According to him, the hack “proves our exact point” about the agency’s October proposal — an advance notice of rulemaking that would set up a voluntary federal registration path for crypto exchanges, with cybersecurity, proof-of-reserves and custody requirements. Selig has said the CFTC cannot make such registration mandatory without Congress.

The equity perp approval rests on the same premise. Perpetuals are what built the offshore derivatives business; relocating them to U.S. exchanges registered with both agencies wraps the margin, clearing and surveillance rules of two federal regulators around them.

Selig cast the matter as a choice between regulated access and “being forced to turn to offshore, and often unregulated, venues.”