U.S. District Judge Valerie Caproni rejected an emergency request to suspend the contracts on November 3, 2026. However, her order indicated that the plaintiffs are likely to succeed in arguing that the CFTC exceeded its statutory authority by treating perpetual derivatives tied to individual stocks as security futures rather than swaps.
The decision leaves the three exchanges' existing approvals intact for now but introduces uncertainty over the regulatory framework governing a growing category of derivatives offered by crypto-native trading platforms.
Judge Questions CFTC Authority Over Stock Perpetual Futures
The lawsuit was filed by the Capital Markets Alliance Association, a New York-based nonprofit whose members include Cboe Global Markets, Citadel Securities and the Healthy Markets Association.
The organization sued the CFTC and its Chairman, Michael S. Selig, in the U.S. District Court for the Southern District of New York. The case, numbered 1:26-cv-09608, seeks to reverse the regulatory approvals associated with filings submitted by Kalshi, Coinbase Derivatives and Bitnomial.
In her November 3 order, Caproni indicated that the plaintiffs had a strong legal argument concerning the agency's authority over the products.
The judge reasoned that perpetual contracts do not involve a sale for future delivery of a single security because they have no expiration date or conventional delivery obligation. Consequently, she questioned whether the instruments could legally qualify as security futures under the CFTC's jurisdiction.
Instead, Caproni said the contracts appeared to meet the definition of swaps, a category that falls under the Securities and Exchange Commission's regulatory authority.
She also concluded that the balance of equities and public interest appeared to favor the plaintiffs, warning that the agency's actions could represent a major disruption to the equities market.
Why the Emergency Request Was Rejected
Despite expressing doubts about the CFTC's legal position, Caproni denied the alliance's request for a temporary restraining order because it failed to establish another key requirement: irreparable harm.
The judge described declarations submitted by representatives of Cboe, Citadel Securities and Healthy Markets as conjectural. According to the order, the plaintiffs had not demonstrated that the potential damage to their members was actual and imminent.
As a result, the court declined to immediately suspend the products while the broader legal dispute continues.
The ruling does not resolve the underlying lawsuit or determine the alliance's separate request for a preliminary injunction. The CFTC's opposition was scheduled for November 6, while the alliance's reply was due November 10. The court noted that the schedule could be modified by the assigned judge.
The docket identifies Judge Lorna G. Schofield as the judge assigned to the case.
Kalshi Continues Listing Single-Stock Perpetual Contracts
The immediate impact of the decision is that the three platforms can continue offering their approved products while the litigation proceeds.
By Wednesday morning, November 4, Kalshi was already listing four single-stock perpetual contracts tied to Qualcomm, McDonald's, Amgen and Costco. The products offered maximum leverage of 4.9 times.
Bloomberg Law reported that Caproni had signaled she might ultimately side with the Wall Street-backed organizations challenging the products, despite declining to halt trading at this stage.
CFTC and SEC Jurisdictional Dispute Takes Center Stage
The dispute largely concerns how stock perpetual futures should be classified under U.S. financial regulations.
On November 3, CFTC Chairman Michael S. Selig said the contracts had been deemed approved under Commission Regulation 40.3 as security futures products, a category subject to joint oversight by the CFTC and SEC.
The three exchanges submitted their filings on September 18. The CFTC subsequently allowed the 45-day review period to expire without issuing a written order.
The Capital Markets Alliance Association argues that contracts without expiration dates or delivery obligations should instead be classified as security-based swaps. Under its interpretation, Congress restricted retail trading in these instruments to national securities exchanges operating under full SEC oversight.
In its complaint, the alliance argued that the CFTC had effectively allowed a parallel synthetic market in U.S. stocks to develop outside the SEC's exclusive jurisdiction.
A CFTC spokesperson criticized the lawsuit, describing it as troubling. In a statement to Reuters, the spokesperson said: "Our markets should be governed by law, not litigation campaigns intended to block innovation."
Bitcoin Perpetual Futures Also Face Regulatory Questions
Although the New York case focuses on perpetual contracts linked to individual stocks, its implications could extend to the broader debate surrounding crypto derivatives regulation.
Perpetual futures are a central product in cryptocurrency derivatives markets. Platforms such as Kalshi and Coinbase have sought to bring similar trading structures into the U.S. market using the CFTC's regulatory framework.
The agency approved the first Bitcoin perpetual contract listed in the United States on May 29, with Kalshi launching its product shortly afterward.
That development is also facing a separate legal challenge. CME Group sued the CFTC in June, arguing that a contract structured around periodic funding payments should be classified as a swap rather than a futures contract. The case remains pending in Washington.
The distinction between the two lawsuits is important. Caproni's November 3 order concerns security futures tied to individual stocks, not commodity-based contracts such as Bitcoin perpetuals.
Nevertheless, her preliminary reasoning raises a broader regulatory question about whether contracts without expiration dates can qualify as futures under existing U.S. law.
For crypto trading platforms, the outcome of these disputes could help determine how perpetual derivatives are classified and regulated in the United States. For now, the stock-linked products remain available, while the courts continue to examine the boundaries of CFTC and SEC authority.
source: bitcoinmagazine
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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Hokanews isn’t responsible for any losses, gains, or chaos that might happen if you act on what you read here. Investment decisions should come from your own research—and, ideally, guidance from a qualified financial advisor. Remember: crypto and tech move fast, info changes in a blink, and while we aim for accuracy, we can’t promise it’s 100% complete or up-to-date.
The articles on Hokanews are here to keep you updated on the latest buzz in crypto, tech, and beyond—but they’re not financial advice. We’re sharing info, trends, and insights, not telling you to buy, sell, or invest. Always do your own homework before making any money moves.
Hokanews isn’t responsible for any losses, gains, or chaos that might happen if you act on what you read here. Investment decisions should come from your own research—and, ideally, guidance from a qualified financial advisor. Remember: crypto and tech move fast, info changes in a blink, and while we aim for accuracy, we can’t promise it’s 100% complete or up-to-date.
