Perpetual futures tied to individual stocks can begin trading on U.S.-regulated exchanges for the first time, the Commodity Futures Trading Commission said Tuesday. The decision extends a derivatives product that was largely confined to offshore crypto venues into the U.S. equity market.

In a statement, CFTC Chairman Michael S. Selig said the contracts, which he called “Equity Perps,” were deemed approved under Commission Regulation 40.3 as security futures products. The regulation is a self-executing certification pathway: a filed product takes effect automatically unless the Commission acts to block it during its review window, which is how the contracts reached approved status without a formal Commission vote.

The contracts may be listed on exchanges that hold 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. He added that bringing the products within the agency’s framework means Americans no longer need to “turn to offshore, and often unregulated, venues.”

The contracts fall under the Commodity Exchange Act, federal securities law and the rulebooks of both agencies. The CFTC’s statement did not name an exchange, identify any contracts or set a launch date. Those details are expected to come from the designated contract markets themselves.

From bitcoin perps to stock perps in five months

Perpetual futures do not have an expiration date. Rather than settling on a fixed day, long and short positions exchange periodic funding payments designed to keep the contract price tied to the spot price. The structure has dominated crypto derivatives for years, with most trading volume taking place on platforms outside U.S. jurisdiction.

The CFTC approved the first U.S.-listed bitcoin perpetual, Kalshi’s BTCPERP, on May 29, and Kalshi launched the product soon afterward. On the same day, CFTC staff granted no-action relief allowing Coinbase Financial Markets to route U.S. clients into offshore perpetual-futures and options liquidity. Kalshi added gold and silver perpetuals in September.

In Tuesday’s statement, Selig described the equity contracts as an extension of the May decision, moving “beyond digital commodities and into traditional securities.”

The legal foundation for the products predates that decision. The Commodity Futures Modernization Act of 2000 created a joint CFTC-SEC framework for security futures products. The agencies also signed a memorandum of understanding on March 11 to coordinate rulemaking and enforcement. Security futures struggled under that framework in practice: OneChicago, the last U.S. exchange dedicated to single-stock futures, ceased operations in 2020, and no domestic venue has listed them since.

Selig cited both developments and repeated SEC Chairman Paul S. Atkins’s description of security futures as stranded in a regulatory “no man’s land” because of insufficient harmonization. Earlier this year, the agencies had also established a joint taxonomy for crypto assets.

The CFTC’s interpretation is contested. CME Group sued the agency in June over the Kalshi approval, arguing that a contract based on exchanged funding payments is a swap under Dodd-Frank rather than a future. That case remains pending. An equity version would additionally involve the SEC’s jurisdiction and could prompt further objections from participants on the securities side.

The onshoring argument after Binance

The approval came five days after what the article describes as the largest theft in crypto’s history. On Oct. 29, attackers whom TRM Labs and Chainalysis linked to North Korea’s TraderTraitor group drained about $6.3 billion from Binance’s hot wallets in roughly 20 minutes.

Binance reopened withdrawals on Sunday and said it had replenished about 95% of the affected assets.

Selig used the breach to reinforce the argument in his Tuesday statement. “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,” he told CNBC on Oct. 30 in a video interview.

He said the hack “proves our exact point” about the CFTC’s October proposal: an advance notice of rulemaking that would establish a voluntary federal registration pathway for crypto exchanges subject to cybersecurity, proof-of-reserves and custody requirements. Selig has said the CFTC cannot make that registration mandatory without congressional action.

The equity-perpetual approval follows the same premise. Perpetuals helped build the offshore derivatives business; moving them onto dual-registered U.S. exchanges would place them within the margin, clearing and surveillance rules of two federal agencies.

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

Source: Bitcoin Magazine. Written by Micah Zimmerman.