TheBlock
The CFTC and SEC issued a joint request for public comment on Friday seeking to update and clarify the definition of "swaps" and "security-based swaps," the products Title VII of Dodd-Frank assigned to their respective jurisdictions. The agencies are also asking for input on the treatment of novel products, explicitly flagging event contracts on prediction market platforms and perpetual futures contracts as areas where the legal perimeter is unclear.
The timing is the story. The request lands four days after CME Group sued the CFTC over its decision to greenlight Kalshi's U.S. perpetual futures as a futures contract — a classification CME argues overrode the statutory definition of a swap and let a regulated exchange (CME) face retail competition from a prediction-market venue on its own turf.
Why it matters
CFTC Chairman Michael S. Selig framed the initiative as an effort to fix "longstanding ambiguities within Title VII of Dodd-Frank that have stifled fair competition and responsible innovation." SEC Chairman Paul Atkins said the clarification is "long overdue," specifically pointing to event-based products. The joint posture matters: the two agencies have spent the post-2022 period trading turf battles over which digital-asset products fall on which side of the swap/security-based-swap line, and a single harmonised definition would settle a stack of pending filings in one motion.
Perpetual futures — a product invented in crypto and now CME's biggest growth battleground with offshore venues — sit at the centre of the question. A reclassification as swaps rather than futures would pull them into a different regulatory regime with different margin, reporting, and clearing rules.
Market impact
The Kalshi approval is the live test case. CME's complaint alleges the CFTC "overrode the stated definition of a swap" when it greenlit Kalshi's perps, and CEO Terrence Duffy told CNBC the products should be regulated as swaps. The CFTC has signalled it will seek to dismiss the suit, arguing it conflicts with the Trump administration's pro-innovation agenda.
Frequently asked questions
-
What did the CFTC and SEC actually ask for comments on?
A joint request for public comment on updating and clarifying the definitions of "swaps" and "security-based swaps," the scope of exclusions from those definitions, and the treatment of novel products including event contracts and perpetual futures.
-
Why is the timing linked to the CME lawsuit?
The request was issued four days after CME Group sued the CFTC over its approval of Kalshi's perpetual futures as a futures contract. The comment record will now inform how regulators classify the exact product line the lawsuit challenges.
-
What is CME's argument against the Kalshi approval?
CME alleges the CFTC overrode the statutory definition of a "swap" when it approved Kalshi's perpetuals, letting a prediction-market venue compete with CME's retail futures market under a lighter regime.
-
How would redefining 'swaps' affect perpetual futures?
A reclassification would move perps into a different regulatory framework under Title VII of Dodd-Frank, with different margin, reporting, and clearing requirements than the futures regime Kalshi was approved under.
-
How has the CFTC responded to the CME lawsuit?
The CFTC told The Block it intends to seek dismissal, arguing the suit conflicts with the Trump administration's pro-innovation agenda for digital-asset markets.
CoinDesk