CryptoSlate
FalconX's swap-dealer arm, FalconX Bravo, filed a joint proposal with the SEC and CFTC on Aug. 12 asking US regulators to treat cash-settled perpetuals tied to a single security or narrow-based security index as security-based swaps when they fall outside the joint SEC-CFTC security-futures framework. The filing expressly extends to comparable contracts offered through DeFi protocols, covering bilateral OTC trades, eligible venues, non-US platforms, and on-chain books alike. A parallel amendment request asks the SEC to raise Rule 18a-10's combined-notional alternative-compliance threshold from 10% to 49% for firms already overseen by the CFTC, easing duplicate reporting friction. The proposal carves out Bitcoin and broader crypto perpetuals, which remain under the existing CFTC regime.
Why it matters
The submission targets the jurisdictional grey zone DeFi-native single-stock perpetual platforms like Hyperliquid have been operating in, where cash-settled equity contracts trade on-chain without SEC registration or the surveillance safeguards that joint security-futures products enjoy. Treating them as security-based swaps would pull in registration, business-conduct, transaction-reporting, capital, margin, and segregation requirements on dealers, while leaving the joint regime as the path of least resistance for compliant listings. The CFTC's June policy statement already carved equity and narrow-index products out as distinct regulatory questions, so the agencies have an open lane to act.
Dealer status would not blanket-apply. Classification hinges on the participant and the transaction, meaning not every protocol developer or trader would need to register. The filing also addresses duplication of CFTC oversight for swap dealers already under that agency's umbrella, a friction point that has slowed dual-registration compliance for digital asset firms.
Market impact
If the SEC adopts the listed-versus-unlisted test, DeFi equity-derivative books face the choice of restructuring as joint security-futures products or complying with the SBS dealer regime. Independent researcher Amadeus Brandes filed an Aug.
Frequently asked questions
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What did FalconX ask the SEC and CFTC to do?
FalconX Bravo, the firm's swap-dealer arm, filed a proposal on Aug. 12 asking regulators to treat cash-settled single-stock and narrow-index perpetuals as security-based swaps when they fall outside the joint security-futures framework, with the rule expressly extending to DeFi protocols.
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Does the proposal cover Bitcoin or broader crypto perpetuals?
No. The filing explicitly carves out Bitcoin perpetuals and crypto perpetuals generally, leaving those contracts under the existing CFTC regime.
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What new obligations would dealers face under the proposed rule?
Dealers would face SEC registration, business-conduct, transaction-reporting, capital, margin, and segregation requirements, with classification depending on the participant and the specific transaction.
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When does the public comment window close?
The comment window closes Aug. 24, after which the SEC and CFTC can advance, defer, or drop the question without committing to rulemaking.
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What alternative did researcher Amadeus Brandes recommend?
Brandes filed an Aug. 21 comment recommending the existing mixed-swap process, with protections targeting insider information, market manipulation, leverage, and funding-rate risks in single-stock perpetuals.
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