Coinbase files response to CFTC and SEC on perpetual derivatives, pushing for clearer regulatory lines

Coinbase submitted a comment letter to both the CFTC and SEC on August 25, responding to the agencies’ joint Request for Comment on how to define “swap” and “security-based swap.” The exchange’s core argument: the current regulatory overlap between the two agencies is creating a jurisdictional fog that keeps innovative derivatives products stuck offshore while the rest of the world trades them freely.

The letter, signed by Scott Bauguess and Julia Hueckel, lays out three specific recommendations designed to untangle the mess. Coinbase wants alternative compliance frameworks, a formal classification of equity perpetual derivatives as security futures, and permission for either CFTC or SEC-regulated exchanges to list securities-related event contracts.

What Coinbase is actually asking for

Perpetual derivatives are, in the simplest terms, futures contracts that never expire. Unlike traditional futures with a set settlement date, perpetuals let traders hold leveraged positions indefinitely, with periodic funding payments keeping the contract price tethered to the underlying asset. They’ve become the dominant instrument in offshore crypto trading for years, but US-based platforms have largely been locked out of offering them due to regulatory ambiguity.

The CFTC has already acknowledged that perpetual derivatives involving digital commodities qualify as commodity futures. But the problem Coinbase is flagging isn’t about whether these products are legal. It’s about which agency gets to regulate what, and what happens when their definitions don’t align.

When a perpetual contract references a digital asset that could be classified as both a commodity and a security, the regulatory picture gets blurry fast. The CFTC oversees swaps. The SEC oversees security-based swaps. And the line between those two categories is, according to Coinbase, inconsistently drawn.

Coinbase’s first recommendation, alternative compliance frameworks, would let exchanges that are already regulated by one agency meet certain requirements of the other without duplicating entire compliance infrastructures. The second recommendation is more specific: Coinbase wants equity perpetual derivatives classified as security futures, which would place them under a jointly regulated framework that already exists. The third push, allowing either CFTC or SEC-regulated exchanges to list securities-related event contracts, is about flexibility in cases where a product doesn’t fit neatly into one agency’s box.

Coinbase’s regulatory footprint

The exchange isn’t making these arguments from the sidelines. Coinbase operates several regulated entities that span both agencies’ jurisdictions: Coinbase Derivatives, LLC is a CFTC-registered Designated Contract Market, Coinbase Financial Markets, Inc. is a CFTC-registered Futures Commission Merchant and NFA member, and Coinbase Capital Markets Corp. is an SEC-registered broker-dealer and FINRA member.

Faryar Shirzad, Coinbase’s Chief Policy Officer, reinforced the filing’s themes in public statements on the same day. His emphasis was on US competitiveness, with perpetual derivatives historically dominating offshore crypto trading volume and exchanges in other jurisdictions having offered them to global traders for years.

Why this matters beyond Coinbase

The CFTC has taken steps between 2025 and 2026 to bring perpetual-style contracts onshore, working to establish frameworks that would give US exchanges competitive parity. Coinbase’s letter fits into that broader trajectory, adding pressure on the inter-agency coordination question specifically.

The alternative compliance framework idea is particularly worth watching. Building parallel compliance systems for two agencies that regulate overlapping products is expensive and time-consuming, which means it disproportionately burdens smaller firms and effectively raises the barrier to entry.