The CFTC and SEC have asked the public to comment on how U.S. rules define swaps, security-based swaps, and related derivatives products.
Summary
- The agencies want feedback on swaps, security-based swaps, mixed swaps, and emerging derivatives products rules.
- CME says Kalshi’s crypto perpetual futures should be treated as swaps under Dodd-Frank law.
- The public comment request could shape crypto perps, prediction markets, and future jurisdiction lines nationwide.
The joint request focuses on Title VII of the Dodd-Frank Act, the law that split parts of the swaps market between the two agencies.
The request seeks input on swap exclusions, mixed swaps, jurisdictional questions, alternative compliance, and new products. The agencies said comments will remain open for 60 days after publication in the Federal Register.
The agencies said market structures and trading practices have changed since the original rules took shape. They asked whether current definitions still match the way derivatives products now trade.
The review also gives both agencies a common record as they weigh products that may touch both commodities and securities laws. It could also shape future staff guidance for market participants and courts.
CFTC Chair Michael Selig said the request could address “longstanding ambiguities” in Dodd-Frank. SEC Chair Paul Atkins said clarification is “long overdue,” including for event-based products.
CME lawsuit raises pressure
The public comment request came as CME Group sued the CFTC over the agency’s treatment of crypto perpetual futures. CME argues that Kalshi’s perpetual futures should fall under swaps rules, not ordinary futures rules.
As previously reported by crypto.news, CME accused the CFTC of bypassing congressional requirements when approving Kalshi’s crypto perpetual contracts. The exchange said the agency created a path for new competitors without using the swap framework set by Dodd-Frank.
CME Chief Executive Terrence Duffy had already said the company planned to sue after the CFTC cleared platforms such as Kalshi and Coinbase to offer regulated crypto perpetual futures. CME says the products compete for retail derivatives customers.
Perpetual futures test old categories
Perpetual futures are derivatives contracts without expiry dates. Traders can hold positions without rolling into a new contract, which makes them common on offshore crypto exchanges.
The CFTC allowed Kalshi’s Bitcoin perpetual futures to remain listed under existing futures rules, subject to compliance with the Commodity Exchange Act and CFTC regulations. Crypto.news earlier reported that Kalshi later expanded into other crypto-linked perpetual products.
The dispute now turns on legal definitions. If regulators treat crypto perps as swaps, platforms may face different rules for clearing, reporting, execution, and oversight. If regulators treat them as futures, venues can list them through the futures exchange process.
Prediction markets add another layer
The CFTC and SEC also asked for views on event contracts and other new products. That part of the request matters because prediction markets have grown quickly and now face questions over federal and state oversight.
Crypto.news has reported several CFTC fights involving Kalshi and state gaming regulators. The CFTC has argued that federally regulated event contracts fall under its authority, while states have claimed some sports-linked products look like gambling.
The SEC has also shown interest. Crypto.news earlier reported that Atkins told lawmakers some event contracts may fall under securities law, depending on how they are written.
The new comment process does not settle the CME case or the prediction market disputes. It gives exchanges, crypto firms, legal experts, and the public a chance to tell regulators where the current definitions need clearer lines.
