I’ve been watching the derivatives space long enough to know that some questions never quite go away, even when the trading volume starts looking ridiculous. Right now one of those questions sits at the center of a fresh letter sent by the Hyperliquid Policy Center. After more than $480 billion in notional volume moved through HIP-3 markets in just ten months, the group is asking the SEC and the CFTC to treat qualifying equity perpetual contracts as security futures. That single request could open a door that has stayed mostly shut for U.S. participants, and the timing feels deliberate.
Why Equity Perps Suddenly Matter to Regulators
Perpetual contracts have been around long enough that most traders treat them as ordinary tools. They never expire. Funding rates keep the price glued to the underlying asset. Positions open and close on a central limit order book with continuous margin. On paper the mechanics look a lot like futures, yet U.S. law still has not settled the most basic label: futures or swaps? I’ve found that uncertainty alone keeps entire product lines offshore, and the Hyperliquid Policy Center is trying to force the conversation into the open.
The group’s August 24 comment letter responds directly to a joint request for input from the two agencies. They want clarity on how to define swaps, security-based swaps, and anything that might sit outside those boxes. HPC’s answer is straightforward. Look first at the structure and the way the contract trades. If it behaves like a future, call it a future. Then look at the underlying asset to decide which regulator takes the lead. A Bitcoin perpetual, a crude oil perpetual, and a single-stock perpetual should all start from the same classification if their futures-like traits match. Only after that step does the equity link pull the product into the security futures category that both agencies already oversee together.
The Mechanics That Make a Perpetual Feel Like a Future
A perpetual has no fixed end date. Instead of a final settlement, it relies on recurring funding payments. When the contract trades above the reference price, longs pay shorts. When it trades below, the flow reverses. That constant push keeps the price tracking the underlying market the same way an expiration and final settlement do for a traditional dated future. In my view this is the feature that should settle the debate, yet it keeps getting overlooked in older enforcement actions.
HPC points to other traits that courts and regulators have long associated with futures. Standardized terms. Fungibility. Fixed unit sizes. The ability to close out through an offsetting trade. On the HIP-3 markets those elements are all present. Positions open and close through a transparent central limit order book. Margin is watched continuously. Prices are public. Holders get pure price exposure without voting rights, dividends, or any ownership claim on the shares themselves. Cash settlement finishes the picture.
Federal courts have already said that a fixed delivery or settlement date is not always required. Contracts of indefinite duration can still carry the essential “futurity.” The CFTC itself applied that logic earlier this year when it approved the first federally regulated Bitcoin perpetual futures contract. The product carries no expiration, yet it was classified as a contract for sale of a commodity for future delivery. That precedent sits on the table. HPC simply asks the agencies to extend the same reasoning to equity-linked versions.
Volume Numbers That Are Hard to Ignore
HIP-3 markets launched roughly ten months ago. Independent deployers can create their own perpetual markets while the protocol handles matching, margin, funding, clearing, and settlement. Deployers choose the assets, the specs, the oracles, the leverage caps, and the open-interest limits. The result has been a rapid expansion into traditional asset classes that U.S. residents still cannot touch.
Crude oil, gold, other metals, foreign exchange, equity indexes, individual stocks, and ETFs all appear on the board. Cumulative notional volume across those markets has passed $480 billion. Open interest has hovered near $4 billion. Looking at Hyperliquid as a whole, the platform processed nearly $3 trillion in notional volume during 2025 and more than $1.5 trillion in 2026 through late August. Those figures are not theoretical. They represent real activity that developed entirely outside the United States while domestic regulated access stayed narrow.
Stock-linked products form a meaningful slice of that growth. Traders get synthetic exposure to individual equities without ever holding the shares. Liquidity has built up. Infrastructure has matured. Yet the same products remain unavailable to U.S. persons. That gap is exactly what HPC is trying to close by placing qualifying equity perpetuals inside the existing security futures framework.
How Security Futures Already Divide Oversight
Security futures are not a new invention. The category has existed for years and already assigns joint responsibility to the SEC and the CFTC. A designated contract market regulated by the CFTC can list security futures after notice-registering with the SEC. A national securities exchange can move in the opposite direction by notice-registering with the CFTC. Intermediaries have parallel paths. The dual registration is designed to keep both agencies involved without forcing an endless jurisdictional fight.
Commercial activity in security futures has been quiet since OneChicago shut down in 2020. Interest is returning, though. CME Group announced plans earlier this year to launch single-stock futures, bringing the product category back onto a major exchange. HPC sees that revival as useful context. If exchanges are already preparing to list dated single-stock futures, the same infrastructure and oversight model can accommodate cash-settled equity perpetuals that share the core characteristics of futures.
The group is careful not to demand a one-size-fits-all rule. It wants confirmation that cash-settled equity perpetuals with established futures traits may be listed as security futures, while still leaving exchanges free to decide how any particular product should be classified. Classification should stay flexible enough that a bilateral, privately negotiated perpetual-style deal without fungibility or multilateral execution can still be treated as a swap or security-based swap.
Past Enforcement Actions Left the Question Open
Earlier CFTC cases sometimes treated perpetual products as swaps after looking only at portions of the Commodity Exchange Act’s swap definition. Those cases never fully examined whether the instruments qualified for the statutory exclusion that covers futures contracts. Other actions labeled perpetual-style products as leveraged or margined retail commodity transactions and applied trading requirements similar to those used for futures. The SEC has used the phrase “perpetual futures” in certain filings while still contesting that the products were offered under regulated futures rules. Neither an enforcement action nor a court ruling has cleanly resolved the threshold question of whether the instruments themselves are futures or security futures excluded from the swap definition.
The CFTC’s May approval of the Bitcoin perpetual futures product took a clearer path. The accompanying policy statement noted that perpetual contracts on other asset classes would need further review and specifically flagged equity-based products as an area requiring both agencies. That statement left the door open, and HPC is walking through it.
Disagreement over the Bitcoin approval has already reached federal court. One major exchange operator has challenged the legal basis, arguing that such products belong under the swaps framework instead. The litigation itself shows how unsettled the ground remains. Around the same period the SEC and CFTC opened the broader definitions review that prompted HPC’s letter. Public input was requested on swaps, security-based swaps, exclusions, and emerging derivatives that test the boundary between the two agencies’ jurisdictions.
What a Consistent Taxonomy Would Actually Change
HPC’s central request is consistency. A perpetual that carries futures characteristics should receive the same initial classification regardless of whether the underlying is Bitcoin, crude oil, or a single equity. Only after that structural determination does the nature of the asset allocate regulatory authority. An equity-linked contract that qualifies as a future would then fall into the security futures bucket and sit under joint oversight.
The group also asks the agencies to update the security futures listing standards so that existing rules can accommodate newer contract structures. The SEC and CFTC already share authority to modify those standards. They have used that power before for American Depositary Receipts, ETFs, closed-end fund shares, and debt securities. Interpretive guidance, policy statements, or staff-level guidance could move the needle without a full formal rulemaking. That path feels practical given how fast the markets are evolving.
I’ve noticed that regulatory lag often creates its own risks. When liquidity and sophisticated infrastructure develop entirely outside the United States, domestic participants are left with fewer choices and, sometimes, less transparent venues. Bringing qualifying equity perpetuals onshore under a known dual-oversight model could reduce that gap. It would also give both agencies a clearer line of sight into products that already attract hundreds of billions in volume elsewhere.
Practical Implications for Market Participants
If the agencies accept the core of HPC’s proposal, designated contract markets and national securities exchanges would gain a clearer path to list cash-settled equity perpetuals. Notice registration procedures already exist. Margin, clearing, and surveillance systems used for security futures could be adapted. Intermediaries would know which dual-registration routes apply. Traders would finally have regulated domestic access to a product type that has proven its demand offshore.
That access would not be unlimited. Listing standards would still need to be met. Position limits, reporting requirements, and customer protection rules would continue to apply. The key shift would be moving from an open classification dispute to a workable framework that both agencies already understand. In my experience, markets tend to prefer imperfect but known rules over prolonged uncertainty.
Exchanges would retain flexibility. Nothing in the proposal forces every equity perpetual into the security futures category. A product that lacks standardization, fungibility, or multilateral execution could still be treated as a swap or security-based swap. The framework would simply confirm that the futures route is available when the characteristics line up.
The Broader Classification Challenge Ahead
Perpetual contracts are only one example of products that stretch traditional definitions. New structures keep appearing. Some look like futures, some look like swaps, and some sit in the middle. A consistent taxonomy that starts with structure and trading characteristics before turning to the underlying asset would reduce the risk of conflicting signals from the two agencies. It would also give innovators a clearer sense of where new products are likely to land.
HPC emphasizes that the lack of an expiration date should not automatically disqualify a contract from futures treatment. Courts have already accepted that point in other contexts. The CFTC has accepted it for at least one crypto product. Extending the logic to equity-linked versions is the next logical step if the goal is coherent regulation rather than product-by-product improvisation.
Perhaps the most interesting aspect is how much activity has already occurred without U.S. regulatory clarity. Nearly half a trillion dollars in notional volume on HIP-3 equity and traditional asset markets alone shows that demand exists. The infrastructure is running. The question is whether U.S. markets will be allowed to participate under rules that both agencies can oversee together, or whether the activity will remain largely offshore for the foreseeable future.
Possible Paths the Agencies Could Take
The letter outlines several non-exclusive options. Interpretive guidance could clarify that cash-settled equity perpetuals with the established characteristics of futures may be listed as security futures. A joint policy statement could set out the structural factors the agencies will examine. Staff-level guidance could provide more detailed expectations for listing standards and dual registration. Any of those routes could move faster than a full notice-and-comment rulemaking while still giving market participants a usable framework.
Updating the security futures listing standards themselves would address another practical concern. Existing standards were written with older contract designs in mind. Newer perpetual structures may need modest adjustments to fit cleanly. The agencies have amended those standards before for other novel instruments. Doing so again for equity perpetuals would keep the category relevant rather than freezing it in past market conditions.
None of this requires inventing an entirely new regulatory category. The security futures framework already exists. The dual-oversight model already exists. The notice-registration procedures already exist. HPC is essentially asking the agencies to confirm that the tools they already have can be used for a product type that has demonstrated substantial volume and demand.
Risks of Leaving the Status Quo in Place
Continued uncertainty carries its own costs. Product development slows when legal status remains ambiguous. Liquidity fragments across jurisdictions. U.S. persons who want exposure to equity-linked perpetuals must either forgo the product or seek it through less transparent channels. Enforcement resources get spent on classification fights instead of focusing on actual customer protection or market integrity issues.
At the same time, offshore venues continue to refine the model. Funding mechanisms, oracle designs, margin systems, and risk controls keep improving. The longer domestic regulated markets stay on the sidelines, the more the competitive gap widens. I’ve seen similar patterns with other derivative products in the past. Once liquidity concentrates elsewhere, bringing it back onshore becomes harder even after the rules finally clarify.
A clear security futures pathway would not eliminate all risk. It would, however, place the products inside a supervisory system that both agencies already know how to operate. Surveillance, reporting, capital requirements, and customer protections would apply in a predictable way. That outcome seems preferable to prolonged ambiguity.
Looking at the Bigger Regulatory Picture
The joint request for comment that prompted HPC’s letter is broader than equity perpetuals alone. The agencies are examining the entire boundary between swaps and futures, including products that may fall outside both definitions. Equity perpetuals simply offer a concrete, high-volume test case. Settling their status would give useful guidance for other emerging structures as well.
Consistency across asset classes is another theme that runs through the letter. Treating a Bitcoin perpetual as a future while treating an otherwise identical equity perpetual as a swap creates unnecessary complexity. Starting with structure and trading behavior, then layering on the underlying asset, produces a cleaner taxonomy. It also reduces the chance of conflicting signals from the two agencies when the same basic product design is applied to different underlyings.
In the end the request is modest in form if not in potential impact. Confirm that cash-settled equity perpetuals carrying the established characteristics of futures may be listed as security futures. Preserve exchange flexibility on individual classifications. Keep the taxonomy consistent. Update listing standards where needed so newer designs can fit. Those steps would give the market a usable map without requiring the agencies to invent an entirely new regulatory regime.
Whether the SEC and CFTC accept that map remains to be seen. The volume numbers, the existing dual-oversight framework, and the recent Bitcoin perpetual approval all provide supporting context. The classification question has stayed open long enough. After $480 billion in notional volume on HIP-3 markets alone, the practical case for clarity has become difficult to dismiss. The next move belongs to the agencies, and the market will be watching closely to see how they answer.
For participants who have waited for regulated domestic access, the letter represents more than a technical comment. It is a direct attempt to translate proven offshore activity into a framework that U.S. law already recognizes. If the agencies take up the invitation, equity perpetuals could move from a regulatory gray zone into a defined, jointly supervised category. That shift would not solve every issue in derivatives regulation, but it would remove one persistent source of uncertainty and open a clearer path for products that traders have already shown they want.
