Coinbase Wants Equity Perpetuals Brought Into the U.S.
Coinbase is calling on the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to create a clearer regulatory path for equity perpetual contracts, arguing that the products could be brought into regulated U.S. markets.
The exchange is proposing that certain equity-linked perpetuals be classified as security futures, a category that already falls under joint SEC and CFTC oversight.
The proposal could have significant implications for derivatives markets because equity perpetuals are widely traded through offshore platforms but remain difficult to offer to U.S. customers under the existing regulatory structure.
The CFTC's existing security futures framework already covers futures based on individual securities and narrow-based security indexes.
Coinbase Targets the Regulatory Gap
Coinbase's argument centers on a relatively simple idea: if equity perpetuals can fit within the existing definition of security futures, regulators could potentially create a pathway for these products to operate legally in the United States.
Security futures already occupy a unique position in U.S. financial regulation because they are treated as both securities and futures.
The SEC explains that security futures are jointly regulated by the SEC and CFTC, meaning firms operating in this market generally face requirements from both agencies.
Coinbase's proposal therefore seeks to use an existing regulatory category rather than creating an entirely new framework for equity perpetuals.
What Are Equity Perpetuals?
Equity perpetuals are derivatives that provide exposure to the price movements of stocks without a traditional expiration date.
They resemble perpetual futures popularized in crypto markets, allowing traders to maintain leveraged long or short positions without having to roll contracts as they approach expiration.
That structure has become popular on offshore trading platforms because it allows traders to gain synthetic exposure to equities while remaining outside traditional U.S. stock-market infrastructure.
The challenge is determining which existing U.S. regulatory framework should govern these products.
Why Security Futures Matter
Security futures already have a defined place in the U.S. regulatory system.
The CFTC says security futures include futures on individual stocks and narrow-based security indexes. These products are subject to joint SEC and CFTC jurisdiction.
That makes the classification potentially important for equity perpetuals.
If regulators determine that certain equity-linked perpetuals qualify as security futures, exchanges could have a clearer framework for offering similar products to U.S. traders.
However, classification alone would not automatically authorize every equity perpetual product. Exchanges, intermediaries, contracts and market infrastructure would still need to satisfy the applicable regulatory requirements.
Coinbase Also Wants Alternative Compliance
Coinbase is also calling for an alternative compliance framework designed to reduce overlapping requirements between the SEC and CFTC.
The issue is particularly relevant because security futures sit directly between the two agencies.
Under the existing system, firms dealing with security futures can be subject to requirements from both regulators. The SEC notes that security futures markets and intermediaries operate under a jointly regulated framework.
Coinbase's proposal could therefore aim to make compliance more efficient by allowing firms to satisfy comparable requirements through a coordinated framework rather than duplicating similar obligations.
Could Offshore Equity Perps Move Onshore?
The potential impact goes beyond Coinbase.
Equity perpetuals have become increasingly popular among traders looking for leveraged exposure to major stocks without directly purchasing the underlying shares.
Much of that activity currently takes place through offshore platforms.
A clearer U.S. regulatory framework could give exchanges an incentive to bring some of that activity into regulated American markets.
That could improve transparency and regulatory oversight while giving U.S. traders access to products that are currently difficult or impossible to obtain through domestic platforms.
The SEC and CFTC Already Share Oversight of Security Futures
The concept is not entirely new.
The framework for security futures was established after Congress authorized futures based on individual stocks and narrow-based indexes.
The SEC states that security futures are securities under federal securities laws while also qualifying as futures under the Commodity Exchange Act. That dual status is why the products fall under joint SEC and CFTC jurisdiction.
This existing structure could provide regulators with a starting point for considering whether certain equity perpetuals can fit within the same framework.
Equity Perpetuals Could Expand U.S. Derivatives Markets
If regulators accept Coinbase's approach, U.S. derivatives markets could eventually gain access to a broader range of continuously traded equity products.
That could create competition between traditional futures exchanges, crypto-native platforms and other regulated venues.
The development could also accelerate the convergence between traditional finance and crypto market infrastructure.
Rather than treating perpetual futures as exclusively crypto-native products, regulators would have to determine how similar structures should work when their underlying assets are stocks.
Regulatory Classification Remains the Key Question
The biggest issue is still classification.
Calling an equity perpetual a security future would not necessarily resolve every regulatory question surrounding leverage, margin, custody, market surveillance, investor protection and trading infrastructure.
The agencies would need to determine whether the product's characteristics fit within the existing security-futures framework and what additional requirements would apply.
The CFTC's current security-futures rules show that products based on individual securities already operate within a detailed regulatory framework.
What Coinbase's Proposal Could Mean for Crypto Markets
Coinbase's proposal represents a broader push to bring offshore crypto-style financial products into regulated U.S. markets.
If equity perpetuals receive a workable regulatory pathway, other derivatives products could eventually face similar questions about whether existing financial categories can accommodate newer blockchain-based trading structures.
For Coinbase, the opportunity could mean expanding its derivatives offering.
For U.S. regulators, the challenge will be balancing innovation and competition with market integrity and investor protection.
And for traders, the biggest potential change would be straightforward: products that have largely existed offshore could eventually become available through regulated U.S. venues.
Coinbase's proposal now puts equity perpetuals directly into the SEC-CFTC regulatory debate. Whether the agencies ultimately classify these products as security futures could determine whether a major segment of the offshore derivatives market gets a viable path into the United States.
