Arthur Hayes ‘flattered’ as Coinbase backs US stock perps
Arthur Hayes, co-founder of BitMEX, has publicly backed Coinbase in a US legal dispute over stock perpetual futures, praising the exchange’s stance against the Capital Markets Alliance Association’s attempt to ban the trading products.
Coinbase and five other companies submitted a brief on Monday opposing the alliance’s request to block trading in perpetual futures tied to individual stocks. The court accepted the brief on Tuesday.
The Capital Markets Alliance Association, which brought the lawsuit, argues that these contracts should be treated as security-based swaps, which face tighter restrictions on retail trading. The CMAA claims the products are already diverting business from traditional stock markets.
Hayes was CEO of BitMEX when the crypto derivatives exchange launched its Bitcoin perpetual swap, a product that helped make perpetual swaps a staple of crypto trading. He expressed his support for Coinbase’s legal defense.
SEC Weighs In
The US Securities and Exchange Commission reportedly submitted a proposed court brief on Monday, opposing the alliance’s request to temporarily halt trading in the contracts. The agency said it was reviewing the exchanges’ rules for listing the contracts.
The brief left open whether the SEC would set those rules aside and whether the contracts qualify as security futures or security-based swaps. The CMAA cited about $375 million in reported 24-hour notional trading volume for Kalshi’s stock perpetuals shortly after launch.
Lack of Expiry at Issue
Stock perpetuals let traders speculate on individual share prices without owning the underlying stocks. Unlike traditional futures, the contracts have no fixed expiration date. This lack of a fixed expiration or delivery date could complicate the case for treating perpetual contracts as futures.
On Nov. 3, US District Judge Valerie Caproni denied the group’s request for a temporary restraining order because it had yet to show likely irreparable harm. She found the alliance was likely to succeed on its claim that the CFTC exceeded its authority.
Wojciech Kaszycki, strategy adviser to BTCS SA, warned that a ruling against the CFTC could push trading activity toward offshore and decentralized platforms. He said the product doesn’t die; it just changes address.
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