Coinbase Seeks End to Regulatory Tug-of-War Over Perpetual Futures and Prediction Markets

Coinbase has called on U.S. regulators to resolve the jurisdictional overlap that currently clouds the legal status of perpetual futures and prediction market products. In a comment letter submitted to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), the exchange outlined recommendations aimed at establishing clear, workable rules for these increasingly popular digital asset derivatives.

The CFTC and SEC have been locked in a jurisdictional dispute over these products, leaving market participants without clear guidance. Coinbase's chief policy officer, Faryar Shirzad, summarized the exchange's position on X, highlighting three main recommendations:

The first recommendation is to develop a unified regulatory framework that promotes consumer choice, market competition, and innovation. The second proposal is to classify equity-based perpetual futures products as security futures, subject to SEC jurisdiction. The third suggestion allows exchanges regulated by either the CFTC or the SEC to list equity-related prediction products, as long as they meet the relevant agency's standards.

The request for public input comes amid a broader push by U.S. regulators to modernize oversight of digital assets. Perpetual futures, contracts without an expiration date that allow traders to speculate on price movements, have become a mainstay of crypto trading, particularly on offshore platforms. Prediction markets, which allow users to bet on the outcome of events ranging from elections to economic data releases, have also grown in popularity, drawing scrutiny from both agencies.

Coinbase's letter is notable because it offers a concrete path forward, rather than simply complaining about the status quo. By proposing that equity-based perpetual futures be treated as security futures, Coinbase acknowledges the SEC's role while also advocating for a more streamlined approach that would allow exchanges to operate under a single regulator for a given product.