Historic Approval of Stock Perpetual Contracts in the U.S. Sparks Urgency Among Wall Street Giants

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

American investors are one step closer to trading U.S. stock perpetual contracts in compliance with local regulations.

On November 3, Michael S. Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), issued a statement officially approving the listing of equity perpetual futures contracts linked to U.S. individual stocks on regulated U.S. exchanges.

For a long time, "perpetual contracts" have been a hallmark innovation of the crypto market—without an expiration date, no need for frequent rollovers, and anchored to spot prices through funding rates. With the CFTC giving the green light, this trading product, born in the offshore crypto market, will officially cross asset boundaries and enter the tightly regulated traditional U.S. stock market. This means that U.S. investors will have the opportunity to go long or short on the stock prices of listed companies like Apple, Nvidia, and Tesla through perpetual contracts without having to hold the stocks directly.

For trading platforms that have been trying to bring on-chain derivatives markets to the U.S., this is undoubtedly a historic breakthrough; at the same time, Wall Street's response has been one of alarm—immediately after the CFTC's approval, traditional financial giants led by Citadel Securities and the Chicago Board Options Exchange (Cboe) rushed to file a lawsuit in federal court, attempting to hit the pause button.

Regulatory Green Light: Four Exchanges First to Obtain Entry Tickets

According to Selig's statement, these individual stock perpetual contracts are classified as security futures products under the U.S. Commodity Futures Modernization Act (CFMA) and are considered approved under CFTC Regulation 40.3 procedures. This means that they are not solely regulated by the CFTC but are also subject to the relevant laws and regulatory frameworks of both the CFTC and the U.S. Securities and Exchange Commission (SEC).

Selig stated that due to the lack of coordination between the CFTC and SEC in the past, innovative products like security futures have long been in a regulatory gray area. This year, the two agencies have signed a memorandum of understanding (MOU), and this approval is part of their efforts to promote regulatory coordination.

Although the regulatory direction has been set, not all platforms can immediately launch U.S. stock perpetual contracts. According to a summary by David Hoffman, founder of Bankless, platforms hoping to list immediately must meet four stringent conditions:

1. Hold a designated contract market (DCM) license registered with the CFTC;
2. Clear through a registered derivatives clearing organization (DCO);
3. Complete dual registration with the SEC (by submitting Form 1-N to become a notice-registered national securities exchange);
4. Have previously submitted a rule change application for individual stock perpetual contracts during the window period from mid-September to early October and completed the 45-day review period.

Currently, only four platforms in the U.S. have completed the entire application process and are expected to qualify for the first batch of approvals.

• Kalshi (KalshiEX LLC): As a pioneer in breaking through prediction markets and derivatives, Kalshi secured the first BTC perpetual contract in May and submitted an individual stock perpetual application to regulators at the end of September. According to its filing documents, Kalshi plans to cover 58 popular U.S. stock contracts, including Apple, Tesla, and Nvidia, with a rule setting an initial margin limit of 15.50% (equivalent to a maximum leverage of about 6.5 times), providing a trading window of five days a week, 23 hours a day (from 6 PM EST Sunday to 5 PM EST Friday), with funding rates settled daily based on observations during regular trading hours.
• Coinbase (Coinbase Derivatives, LLC): Coinbase Derivatives submitted its filing to the SEC and CFTC on September 18. Coinbase's plan adopts a cash settlement design with no actual equity delivery, with trading hours from 8 PM EST Sunday to 5 PM EST Friday, funding rates calculated hourly and settled in cash through margin accounts, with a statutory margin floor of 15% for security futures and a leverage cap of about 6.7 times.
• Kraken (Bitnomial Exchange, LLC): Kraken submitted a rule change simultaneously on September 18 through its derivatives exchange Bitnomial, which is a key partner for Kraken in the compliant derivatives market in the U.S. Bitnomial has set a customer margin floor of 15.25% for unhedged positions. Through this channel, mainstream U.S. retail platforms like Kraken will be able to quickly distribute onshore U.S. stock perpetual products to compliant users.
• Crypto.com (Nadex / OG.com): The North American derivatives exchange (Nadex, now also operating as OG.com Markets, part of Crypto.com's North American derivatives system) has formally submitted an application to the CFTC on September 24 for the addition of Chapter 16 of its rulebook, specifically establishing cash-settled perpetual single-stock futures (Perpetual SFPs) trading and real-time funding rate pricing mechanisms after receiving confirmation from the SEC on its Form 1-N filing. Notably, Robinhood has recently designated OG.com as its clearing infrastructure partner for its prediction market, indicating significant potential for this license.

It is important to emphasize that obtaining an entry ticket does not mean that any stock can be listed without restrictions. Exchanges still need to comply with previously submitted listing standards, including the liquidity of the underlying stock, trading volume, pricing reliability, and the ability to resist market manipulation. In simple terms, the regulatory authorities have opened the door, but which stocks can become the underlying assets for perpetual contracts will be determined by the exchanges according to the rules.

Future Contenders: Lighter and Hyperliquid Expected to Enter the Market

In addition to the four centralized licensed institutions mentioned above, decentralized perpetual contract exchanges (Perp DEX) native to crypto are also actively pushing for compliance, attempting to carve out a piece of this trillion-dollar pie.

Among them, Lighter's progress is the most clear.

During the third-quarter investor conference call held on October 21, Lighter founder Vladimir Novakovski stated that the team plans to apply for designated contract market (DCM) status with the CFTC in November while also applying for derivatives clearing organization (DCO) registration. The former corresponds to the trading venue, while the latter is responsible for post-trade clearing and risk management.

Vladimir stated at the time: "After submitting the application, the regulatory agency has a maximum statutory period of 180 days to conduct the review. Since we have already had sufficient communication with the CFTC in advance and completed all preliminary preparations, we expect the subsequent review process to be very smooth."

Hyperliquid is also making strides, but the path seems slightly different.

In August of this year, Trump publicly stated that CFTC Chairman Selig is promoting Hyperliquid to enter the U.S. market in a fully compliant and legal manner. The policy lobbying organization closely related to Hyperliquid, the Hyperliquid Policy Center, subsequently submitted comments to the SEC and CFTC, arguing that perpetual contracts with futures characteristics should be classified as security futures, allowing exchanges regulated by both agencies to participate in this market.

On October 29, the Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, announced a partnership with Hyperliquid's HIP-3 market TradeXYZ, planning to establish a regulated perpetual contract market and clearing system based on Hyperliquid in the U.S. This plan still requires regulatory approval, but it offers another possibility—Hyperliquid does not necessarily have to directly transform existing DEX into a U.S.-licensed exchange; it can also establish an independent compliant market through partners and continue to provide underlying infrastructure.

Wall Street's Rapid Counterattack, Demanding CFTC to Revoke Approval Decision

However, just as the CFTC opened the door to individual stock perpetual contracts, Wall Street's counterattack has already arrived.

On November 3, the Capital Markets Alliance (CMA), a lobbying organization supported by Cboe Global Markets, Citadel Securities, and the Healthy Markets Association, filed a lawsuit in the Southern District of New York federal court, seeking to revoke the CFTC's approval of individual stock perpetual contracts.

The core logic of the CMA is that since perpetual contracts have no expiration date, they do not meet the legal definition of traditional "security futures" and, in legal essence, belong to "securities-based swaps." Under U.S. law, swap products based on a single stock fall under the exclusive jurisdiction of the SEC, and the CFTC has no authority to unilaterally approve them.

Additionally, the CMA accused the CFTC's decision of violating the Administrative Procedure Act (APA), arguing that the CFTC bypassed formal legislative and comprehensive review processes, hastily launching the product through a 45-day overdue automatic effectiveness mechanism. CMA Secretary Adam Ford criticized this, stating: "Rushed financial products that evade mature regulatory frameworks will undermine investor protection and damage the integrity and resilience of the U.S. financial system."

In addition to the CMA that initiated the lawsuit, the Securities Industry and Financial Markets Association (SIFMA) and Nasdaq have also recently submitted letters of opposition to the SEC, warning that individual stock perpetual contracts have thin liquidity during overnight trading hours, making them prone to price manipulation and risks of retail liquidation, and urging the SEC to exercise its statutory authority to urgently abolish the rule changes of these four exchanges within the 60-day window following the CFTC's approval.

The reasons for Wall Street's sensitivity are simple: for traditional options and futures giants like Cboe, zero-day-to-expiration (0DTE) options and traditional stock options are their core profit sources. Once the "individual stock perpetual contracts" that do not require rollovers, are intuitive to operate, and support near-round-the-clock trading become popular on platforms like Coinbase, Kraken, and Kalshi, the traditional options market and the order flow of market makers will face serious diversion.

A Clash Bound to be Recorded in Regulatory History

The clash on November 3 is destined to be recorded in the annals of U.S. financial regulation. On one side is the historic regulatory green light, attempting to introduce the "perpetual contract" mechanism that has proven successful in the crypto market into U.S. stocks, pulling offshore liquidity back to the U.S. mainland; on the other side are Citadel and Cboe, among other Wall Street vested interests, raising the banner of securities law and building a defense line in federal court.

In the next 60 days, whether the CFTC and SEC can withstand Wall Street's pressure and whether the federal court will issue a temporary injunction will directly determine whether Coinbase, Kalshi, and others can successfully ring the first "opening bell" for U.S. stock perpetual contracts, and will also determine whether new on-chain players like Lighter and Hyperliquid can truly welcome their "Wall Street moment."