Wall Street Takes Perpetual Stock Futures to Court

On November 3, 2026, the US Commodity Futures Trading Commission (CFTC) gave the green light to something that until now existed only outside the country or on unregulated platforms. Perpetual stock futures can now be traded for the first time on registered US markets. That same day, just a few hours later, Cboe, Citadel Securities and the Healthy Markets Association filed a lawsuit to overturn the decision.

In other words, crypto trading’s flagship product arrives on Wall Street and Wall Street responds with lawyers. Let’s look at what happened, what exactly a perpetual is and why this fight goes far beyond a new financial product.

What has the CFTC approved?

CFTC Chairman Michael S. Selig published a statement announcing that perpetual contracts on individual stocks (he calls them “Equity Perps”) can begin trading on designated contract markets that are also registered with the SEC to trade security futures.

The fine print matters. The CFTC does not treat them as just another crypto derivative, but as security futures, a category created by the Commodity Futures Modernization Act of 2000 and overseen jointly by the CFTC and the SEC. That is why these perpetuals are subject to both commodities law and federal securities laws. Technically, the approval came via Regulation 40.3, under which a contract is deemed approved if the regulator does not block it within the deadline.

Selig frames it as part of his strategy to bring these products onshore. In May, the CFTC had already approved the first bitcoin perpetual on a regulated market, Kalshi’s BTCPERP, and in March it signed a memorandum of understanding with the SEC to coordinate. In his statement he revives an expression used by SEC Chairman Paul S. Atkins, who described these products as trapped in a regulatory “no man’s land.” His underlying argument is simple. If they are not offered in the United States, investors will end up on foreign platforms that are often unregulated.

What is a perpetual future and why is it so popular?

A traditional future is like renting a car with a return date. The contract expires on a specific day and, if you want to keep going, you have to sign a new one. A perpetual is a rental with no return date. You can hold the position for as long as you like.

So how do you keep the contract price from drifting away from the stock’s actual price? With the famous funding rate. It works like a seesaw. If there are far more buyers than sellers and the perpetual trades above the stock, those betting on a rise pay those betting on a fall every few hours. If the opposite happens, the bears pay. That payment pushes the contract price back toward the stock price.

Perpetuals were born in the crypto world and are now its most traded instrument. Their appeal is twofold. They let you trade with leverage, meaning you control far more money than you put in, and you can forget about expiration dates. But two things should be clear. With a perpetual you are not a shareholder, so you don’t vote at the shareholders’ meeting or have any rights over the company. And leverage multiplies losses exactly as it does gains.

They already existed outside the United States. Coinbase, for example, has offered them since March 2026 to non-US customers, with up to 10x leverage on individual stocks, and decentralized platforms such as Hyperliquid also list them.

Who wants to offer them in the United States?

Several platforms born in the crypto world or in prediction markets had the product ready. Coinbase Derivatives filed its application with the CFTC in September to list a range of perpetuals on stocks and ETFs. According to trade press, Kalshi, Bitnomial (part of the Kraken group) and OG.com (from Crypto.com) also have plans underway.

That is the heart of the conflict. The newcomers are new competitors moving squarely into the territory of traditional exchanges.

The lawsuit against perpetual stock futures

The response came the same day. The Capital Markets Alliance, a coalition made up of Cboe Global Markets, Citadel Securities and the Healthy Markets Association, sued the CFTC in federal court in the Southern District of New York to have the approval vacated.

Its legal argument is that these contracts are not security futures but security-based swaps. That category falls under the exclusive jurisdiction of the SEC and has much stricter rules for sale to retail investors. The alliance also accuses the CFTC of violating the Administrative Procedure Act by failing to properly justify its decision or assess the risk to investors.

Cboe CEO Craig Donohue argues in the company’s statement that the CFTC is endangering a framework that has protected investors “for more than nine decades.” For Cboe, these products are securities and should be traded on securities platforms, with all their safeguards. The alliance is also seeking injunctive relief.

Donohue anticipates the most obvious criticism. He insists that Cboe does not fear competition and that, if this were merely a commercial matter, it could launch these products on its own CFTC-regulated platforms. In his account, what is at stake is investor protection and respect for the law, and he warns of the risk of regulatory arbitrage, which means choosing the regulator that suits you best.

The CFTC has not stayed silent. A spokesperson called the lawsuit a “troubling” interference in the markets it oversees, according to Reuters, and argued that markets should be governed by the law, not by litigation campaigns.

Not the first battle

This lawsuit has a direct precedent. In June, CME Group, the world’s largest derivatives operator, sued the CFTC in a Washington court over the approval of Kalshi’s and Coinbase’s bitcoin perpetuals. In September, the CFTC asked the judge to dismiss the case because, in its view, CME lacked standing to sue.

Now the front is opening in equities, the core business of traditional exchanges. When the CFTC approved crypto perpetuals in May, shares of CME, Cboe and ICE fell because investors saw it as a competitive threat. Several analysts point out that both Cboe and Citadel have commercial interests in this matter.

And what does this have to do with tokenization?

A lot, even though they are not the same thing. A tokenized stock is the stock itself, or a claim on it, recorded on a blockchain. If you hold it, you are the owner. A perpetual is just a bet on its price. You own nothing.

But the two paths intersect. Selig said in June that the CFTC wanted to talk to the SEC about perpetuals also linked to tokenized stocks, pre-IPO companies and other real-world assets. And industry firms such as Ondo Finance have asked both regulators to fit perpetual stock futures into the security futures regime. Whatever the New York judge decides will determine which regulator rules the border between crypto and equities, precisely the ground where tokenization is being built.

What comes next?

According to the trade outlet LeapRate, the government must respond to the lawsuit on November 6 and the alliance has until the 10th to reply. From there, there are two scenarios. If the court sides with the CFTC, the United States will have a regulated market for perpetual stock futures with several platforms competing. If it sides with the alliance, these products would fall under the SEC’s exclusive purview and their path to retail investors would become considerably more complicated.

The rental with no return date now has permission to drive on Wall Street. It remains to be seen whether a judge revokes its license before it picks up speed. Who do you think should oversee these products, the futures regulator or the securities regulator?This content is for informational purposes only and does not constitute investment advice