US CFTC, SEC Push to Clarify Derivatives Products Definitions amid CME Lawsuit

The SEC and CFTC are seeking public input to clarify and harmonize how derivatives products are defined and regulated in the US. The move comes amid ongoing tensions, including CME lawsuit, over the oversight of futures, swaps, and emerging crypto-linked products.

CFTC and SEC Seek Input to Clarify Swaps & Other Derivatives Definitions

The US Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) issued a rare joint request for public input on potential opportunities to further update, clarify, and harmonize derivatives product definitions.

The financial regulators seek comments on topics including definitions of swaps and security-based swaps and how mixed swaps and emerging products should be treated.

The regulators will also accept at public input on potential clarity on regulatory definitions, areas of alternative compliance, and jurisdictional and interpretive questions.

“Today’s joint request for public comment presents an opportunity to address longstanding ambiguities within Title VII of Dodd-Frank that have stifled fair competition and responsible innovation,” said CFTC Chairman Michael S. Selig.

As CoinGape reported, CFTC issued a no-action letter for swap post-trade risk reduction services (PTRRS), including portfolio rebalancing and basis risk mitigation. Selig claimed the regulator aims to provide relief from over-regulation under the Dodd-Frank Act.

CFTC Chairman Mike Selig even confirmed approval for more security futures, security perpetuals, and other types of assets “so that America remains the crypto capital of the world.”

CME Lawsuit amid Approval of Crypto Derivatives on Kalshi

Derivatives exchange CME sued the US CFTC and Chair Michael Selig over approval of crypto perpetual futures. The exchange argues that these contracts are swaps and not futures, alleging the CFTC approved them the wrong way.

This move follows the Kalshi’s launch of several crypto perpetual futures. As CoinGape recently reported, the CFTC approved Kalshi’s launch of Hyperliquid perpetuals following the launch of similar products tied to Bitcoin, Ethereum, and XRP.

However, SEC and CFTC believe comments could address current regulatory definitions, interpretations, and jurisdictional frameworks to reflect evolving market structures, financial products, and trading practices. This comes amid the SEC-CFTC harmonization initiative to create a unified crypto regulatory framework.