Arthur Hayes, co-founder of BitMEX, says he is “flattered” that Coinbase is defending perpetual futures on US stocks in federal court — a contract type BitMEX pioneered in the cryptocurrency market a decade ago. BitMEX launched its bitcoin perpetual swap in May 2016, and Hayes recalled that Washington’s reaction at the time was “less than warm.”

“Ten years later, Coinbase is in federal court defending the right to offer them on US stocks,” Hayes told Cointelegraph. He added a line of his own: “Imitation is the sincerest form of regulation.”

A perpetual future is a derivative contract with no expiration date. Traders can hold a position on a share price for as long as they want, without having to roll the trade over when a contract ends. The product was first developed in cryptocurrency markets, where perpetual contracts typically rely on a periodic funding mechanism to keep their price aligned with the underlying asset, and the format has since grown into one of the most heavily traded segments of the digital-asset derivatives market.

The resulting court fight centers on how that contract type should be classified under US law.

How the Case Started

On November 2, the Commodity Futures Trading Commission (CFTC) approved applications from Coinbase Derivatives, Kalshi and Bitnomial to offer single-stock perpetual futures — contracts that let traders bet on a share price without owning the stock. The approvals let the three firms offer the products through their regulated derivatives venues.

The Capital Markets Alliance Association then sued the CFTC. It argues the contracts should be treated as security-based swaps, a category that faces tighter limits on retail trading. Unlike conventional futures, security-based swaps are overseen by the Securities and Exchange Commission. That classification question carries practical weight: it determines which agency has authority over the products and how restricted retail access to them will be. The group also contends that the agency approved the contracts without fully explaining its reasons and did not address open regulatory questions. Those points were part of a filing made Tuesday.

On November 3, US District Judge Valerie Caproni denied the group’s request for a temporary restraining order, an emergency measure meant to preserve the situation while litigation proceeds. She said the group had not yet shown likely irreparable harm, and she also found the alliance was likely to succeed on its claim that the CFTC went beyond its authority. The denial is not a ruling on the merits. It means only that the approvals remain in place while the case continues.

Who Is Backing the CFTC

On Monday, Coinbase and five other companies filed a brief opposing the alliance’s request to block trading. Kalshi and Payward, the parent company of Kraken, joined Coinbase in the filing, which the court accepted on Tuesday. Such an amicus brief is a formal submission from an outside party: the filer is not part of the case but wants the judge to hear its view. Coinbase officials say US investors should have access to products already offered in other parts of the world.

The US Securities and Exchange Commission (SEC) also reportedly submitted a proposed brief on Monday opposing the alliance’s request to pause trading. The agency said it was reviewing the exchanges’ rules for listing the contracts. The SEC brief did not say whether the agency would set those rules aside, nor did it state whether the contracts count as security futures or security-based swaps.

The alliance cited about $375 million in reported 24-hour notional trading volume for Kalshi’s stock perpetuals shortly after launch, and it claims the products are already pulling business away from traditional stock markets.

Wojciech Kaszycki, a strategy adviser to BTCS SA, said the lack of a fixed expiration date could complicate the case for treating perpetuals as futures. He warned that a ruling against the CFTC could push trading to offshore and decentralized platforms. “The product doesn’t die; it just changes address,” he said.

The case remains active in federal court, and Judge Caproni has not ruled on the merits. That ruling is the step to watch: it will decide the alliance’s central claim that the CFTC exceeded its authority, and with it whether the approvals stand and the products remain available on the three regulated US venues.