FalconX Seeks SEC Extension to Regulate DeFi Perpetuals

FalconX Bravo, a digital asset market participant and swap dealer, has asked US regulators to treat certain cash-settled perpetuals tied to a single security or narrow-based index as security-based swaps under SEC rules. The firm submitted its proposal to the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) on August 12.

The proposed rule change, which would bring these contracts under the joint SEC-CFTC security-futures framework, does not include Bitcoin perpetuals or crypto perpetuals generally. FalconX's definition specifically covers cash-settled perpetuals and options tied to a single security or narrow-based index that are offered through DeFi protocols.

The firm is seeking to reduce duplicated requirements for firms already overseen by the CFTC, requesting an amendment to Rule 18a-10 that would raise its combined-notional threshold for alternative compliance from 10% to 49%. FalconX maintains that this change would not automatically require every protocol developer or trader to register.