The United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have initiated joint consultations to collect feedback from the public on how digital asset derivatives should be classified, regulated and monitored. This appears after CME Group issued a warning of action for the granting of a contract for the renewal of Kalshi bitcoin, suggesting that the United States regulatory hierarchy is revisiting whether existing rules still apply to new products.

Reference focus derivative definition

The two agencies issued a joint paper on 18 June, which focused on the need to update the definition of multiple products under Chapter VII of the Dodd-Frank Act. The range of comments included swaps, stock swaps, mixed swaps, event contracts, and new trade products that had emerged rapidly in recent years.

The Chairman of the SEC, Paul Atkins, stated that there was a long-standing lack of clarity in the relevant definitions, particularly in the event type products. The Chairman of the CTC, Mike Selig, also stated that the existing ambiguity had troubled regulatory enforcement and market participants and had suppressed fair competition and compliance innovation.

60 days for public opinion

The regulator indicated that the public opinion submission period would last 60 days after the document was published in the Federal Gazette. The objective of the procedure is to determine whether the current definition still reflects current financial product structure and transaction practice.

In terms of presentation, the regulator did not focus solely on a single platform or a single contract, but sought to take the opportunity to redefine the way in which digital asset derivatives were classified in the United States rules system. This means that the follow-up discussions may affect not only the continuation of the Bitcoin contract, but also more complex products driven by other events or structures.

CME and Kalshi dispute heating

Less than a day before the joint consultation was released, CME CEO Terry Duffy had just indicated that he was planning to file an action against CFTC for granting Kalshi ' s release of a bitcoin futures. The core view of CME is that such products do not meet the legal definition of “futures” under the Dodd-Frank Act.

According to Duffy, if the relevant product is closer to a “turnover”, another set of regulatory requirements should apply, including different participation thresholds and compliance rules. That is why the dispute is no longer just a case of a single platform in Kalshi, but extends to the question of how the United States defines encrypted derivatives, who has the right to approve them, and what regulatory path applies.

  • Date of joint comments release: 18 June
  • Public opinion period: 60 days after the publication of the Federal Gazette
  • Controversy: Kalshi Bitco's contract should be resuscitated or not.