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The Blockchain Association urged the SEC and CFTC to create a coordinated US framework for equity perpetual contracts.
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It proposed regulating equity perpetuals under existing security-futures rules, arguing that no new legislation is necessary.
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The group warned that continued regulatory uncertainty will push liquidity, jobs, market data and innovation further offshore.
The Blockchain Association has called on the Securities and Exchange Commission and the Commodity Futures Trading Commission to create a coordinated regulatory pathway for equity perpetual contracts in the United States.
In a comment letter, the industry group argued that uncertainty over whether the products fall under securities or commodities law has pushed trading activity, liquidity, and innovation to offshore platforms.
Equity perpetuals are derivatives that track individual stocks but, unlike conventional futures, have no expiration date. Traders can maintain positions indefinitely, while periodic funding payments help keep contract prices aligned with the referenced shares.
The association said the agencies can regulate these products under their existing statutory powers without waiting for Congress to introduce a new framework.
Blockchain Association Warns Liquidity Is Moving Offshore
According to the association, equity perpetuals currently trade exclusively outside the US through centralized exchanges and decentralized blockchain protocols.
That leaves American markets without the price-discovery data generated by funding rates and continuously updated mark prices. It also means the activity sits beyond US investor-protection, asset-segregation, anti-money-laundering and market-surveillance requirements.
The group warned that delaying action could make the market increasingly difficult to repatriate.
Liquidity tends to concentrate on established platforms, while traders develop relationships and habits that strengthen incumbent offshore venues.
Foreign platforms could therefore continue capturing trading fees, market data, jobs, and technological development tied to US-listed stocks.
The absence of domestic oversight may also create risks of manipulation when offshore perpetual contracts reference American equities. Bringing the activity onshore would allow regulators to apply trade-reporting, recordkeeping, and cross-market surveillance rules.
Existing Security Futures Rules Could Provide a Path
The Blockchain Association recommended using the joint regulatory structure created for security futures as the foundation for equity perpetuals.
Source: finance.yahoo.com