Kalshi Files for Perpetual Futures on Individual US Stocks, Joining Coinbase in Market Expansion

Kalshi, a prominent prediction market operator, has officially submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to offer perpetual futures contracts tied to individual U.S. stocks. This strategic move places Kalshi in direct competition with Coinbase, another major player looking to introduce crypto-style derivatives to the traditional equity markets. The proposal, filed with the SEC, was also submitted to the Commodity Futures Trading Commission (CFTC) for regulatory approval. As of Friday, the CFTC had not yet granted its approval for Kalshi’s groundbreaking initiative.

The proposed perpetual futures contracts are designed with a key differentiator: they will not have a predetermined expiration date. Instead, they will utilize a system of periodic funding payments exchanged between long and short positions. This mechanism is intended to ensure that the price of the perpetual futures contract closely tracks the price of the underlying U.S. stock. Kalshi has stipulated that these novel contracts would be classified as security futures products. Furthermore, they would undergo clearing through Kalshi’s existing CFTC-registered clearinghouse, Kalshi Klear, ensuring a regulated and secure trading environment.

This filing by Kalshi occurs on the same day that Coinbase, a leading cryptocurrency exchange, submitted its own separate proposal to offer perpetual futures linked to individual U.S. equities. Both companies are clearly pursuing a strategy to import a financial instrument that has gained significant traction and popularity within the cryptocurrency derivatives market and adapt it for use in traditional stock trading. This dual approach from Kalshi and Coinbase signifies a growing interest in bridging the gap between decentralized finance (DeFi) innovations and established financial markets.

Kalshi is no stranger to the perpetual futures space. The company already offers perpetual futures contracts for several prominent cryptocurrencies in the U.S., including Bitcoin (BTC), Ether (ETH), Solana (SOL), and XRP (XRP). This existing capability was bolstered by a significant regulatory milestone in May when Kalshi received approval from the CFTC for its Bitcoin perpetual contract. This prior approval demonstrates Kalshi’s established experience in navigating the regulatory landscape for crypto derivatives and provides a foundation for its current ambitions in the equity market.

The competitive landscape for U.S. stock perpetual futures is rapidly intensifying, with Kalshi and Coinbase not being the only entities vying for market entry. Payward, the parent company of the well-known cryptocurrency exchange Kraken, has also entered the fray. Through its subsidiary, Bitnomial Exchange, Payward has filed a similar proposal to offer these single-stock perpetual futures. The company has publicly stated its intention to make these products accessible to U.S. traders directly on the Kraken platform.

Payward has outlined its initial plans, indicating that it intends to launch perpetual futures contracts tied to a selection of 10 prominent U.S. equities. Among the envisioned underlyings are some of the most actively traded and influential stocks in the market, including Tesla, Nvidia, Apple, Microsoft, and Amazon. The company is also reportedly working towards enabling 24-hour trading, five days a week, for these new derivative products, which would offer enhanced flexibility for traders.

These concurrent filings come in the wake of a significant legislative development, or rather, a lack thereof. The CLARITY Act, a proposed piece of legislation aimed at providing regulatory clarity for the digital asset industry, failed to advance in the U.S. Senate on September 15th. The bill fell short of the required 60 votes needed to proceed, marking a setback for proponents of comprehensive crypto regulation.

In the aftermath of the CLARITY Act’s failure to advance, SEC Chair Paul Atkins made a notable statement regarding the agency’s future approach. Atkins declared that, regardless of whether new legislation is passed, the SEC would "act decisively" within its existing statutory authority. He emphasized the agency’s commitment to providing regulatory certainty for both American investors and entrepreneurs operating in the evolving financial landscape. This statement suggests that regulatory bodies may be looking to leverage existing frameworks to address emerging financial products and markets, even in the absence of specific new laws.

The expansion of perpetual futures to individual U.S. stocks represents a significant development in the convergence of traditional finance and the burgeoning world of digital asset derivatives. The success of these proposals, pending approval from the CFTC and SEC, could pave the way for a new era of trading and investment opportunities, offering sophisticated hedging and speculation tools to a broader range of market participants. The involvement of established financial entities like Kalshi and Coinbase, alongside crypto-native firms like Kraken, underscores the growing institutional interest and the increasing interconnectedness of these distinct financial ecosystems. The regulatory bodies will undoubtedly be closely scrutinizing these filings, balancing the potential for innovation with the need to maintain market integrity and protect investors.