The Blockchain Association has urged the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to create a clear regulatory path for equity perpetuals to enter U.S. markets. The group filed comments with both agencies this week, arguing that the products currently trade exclusively offshore.

Equity perpetuals apply a contract structure that originated in crypto trading to stocks and equity indexes: perpetual futures, first popularized by BitMEX's bitcoin swap in 2016, have no expiration date and use periodic funding payments between long and short positions to keep their price tethered to the underlying asset. Offshore venues market the products to non-U.S. customers as a way to trade leveraged equity exposure without holding shares.

Clearer rules, the industry group said, could bring those markets under U.S. oversight, provide investors with the related protections, and attract offshore liquidity, price discovery, jobs and innovation into the United States. In its joint comment letter to the two agencies, the association proposed building on the existing security futures framework and adopting technology-neutral standards for transparency and customer asset protection.

Equity Perpetuals Remain Offshore

According to the Blockchain Association, equity perpetuals today operate outside the United States. As a result, American markets do not capture the price discovery generated by these products, and offshore trading leaves the markets outside the protections associated with U.S. oversight. For U.S. investors, that status means the products are effectively unavailable through regulated domestic venues, even as major crypto exchanges have publicly signaled interest in offering equity perpetuals to American customers if rules permit. The group argued, however, that regulators can address the issue under existing law.

The association is calling on the SEC and CFTC to coordinate on a framework covering innovative financial products and to provide a clear route for equity perpetuals to enter U.S. markets. The request comes as the group warns that prolonged uncertainty could keep market activity offshore, and it specifically cited liquidity, jobs, market data and innovation among the areas affected.

Group Proposes Existing Regulatory Tools

The Blockchain Association recommended using the existing joint framework for security futures and urged regulators to apply their current authorities to novel derivatives where appropriate. That framework has its own history of SEC-CFTC cooperation: it was created by the Commodity Futures Modernization Act of 2000, which ended an 18-year ban on single-stock futures and assigned the two agencies shared oversight of the products, with U.S. trading beginning in 2002.

The group also proposed a technology-neutral framework based on regulatory outcomes. Under that approach, rules would focus on the protections required rather than on any specific market infrastructure. The proposed framework would cover transparency, auditability, market surveillance, customer asset protection, financial integrity and operational resilience.

Blockchain infrastructure, the association added, could help support those requirements. It argued that blockchain-based systems could give market participants more choices around market infrastructure.

SEC and CFTC Face Calls for Coordination

The group said the SEC and CFTC can work together without waiting for new legislation, and its comments focus on using existing regulatory powers to establish clearer treatment of the products. The association wants both agencies to create a workable path for equity perpetual markets, and said regulatory clarity could allow trading activity to move into U.S. markets.

At the same time, it warned that continued ambiguity could keep liquidity and related economic activity offshore, and it called for U.S. oversight to accompany market access for these products.

The Blockchain Association said the SEC and CFTC now have an opportunity to establish clearer rules, urging both agencies to coordinate rather than leave equity perpetuals outside U.S. markets. The agencies have not said publicly how they will respond to the letter, and any move toward a framework would typically come through agency guidance or rulemaking, leaving the near-term question of whether the products reach U.S. venues in regulators' hands.

Source: Crypto Front News