Coinbase and Kraken side with the CFTC as Citadel-backed group sues
Why it matters
The fight over which US regulator polices new trading products is now in court. If the CFTC loses, firms planning stock-linked contracts may have to answer to the SEC instead, so treat launch plans as provisional.
Post to XThe short version
Coinbase, Kalshi, Kraken's parent Payward and three other firms filed papers in a New York federal court on 9 November backing the US agency that oversees futures trading. A group backed by Citadel Securities and Cboe is suing that agency over its approval of contracts that track single company shares and never expire.
Here's what happened. Six firms (Coinbase, Kalshi, Payward, DRW Holdings, Jump Trading and Paradigm) filed papers late on Monday in the US District Court for the Southern District of New York supporting the CFTC, the US futures regulator, according to CoinDesk and The Block. Payward owns Kraken.
The case is about perpetual futures on US stocks: contracts that track a share price and have no end date. Applications from Coinbase, Kalshi and Payward to list them were deemed approved on 2 November, The Block reported.
The Capital Markets Alliance, a new group whose backers include Citadel Securities and Cboe, says these contracts are really security-based swaps, which would put them under the SEC instead. A CFTC spokesperson called the lawsuit troubling, CoinDesk said.
The crypto firms argue the products are security futures, a category Congress gave both the CFTC and the SEC to oversee.
So what's next? The judge let trading continue for now but signalled she sees merit in the alliance's argument, according to CoinDesk.
Where this comes from
Written with AI from the sources above and checked against them before publishing. Here's how we work. This is news, not financial advice. Spotted a mistake? Tell us.
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