Prediction Platform May Bring Crypto’s 24/7 Trading Model to US Stocks
Kalshi is preparing to seek regulatory approval for approximately 60 perpetual futures contracts tied to US stocks such as Tesla, Apple, and Nvidia.
Kalshi’s plan could bring 24/7 leveraged perpetual futures, a staple of the cryptocurrency markets for years, to US stocks. According to a Wall Street Journal report, the company plans to apply for products tracking Tesla, Apple, and Nvidia, as well as certain exchange-traded funds (ETFs).
If approved, these products could be the first regulated single-stock perpetual futures contracts offered in the US. The contracts are intended to trade at night and on weekends when the Nasdaq is closed. This would allow market expectations regarding a company’s value to be priced in before the underlying stock resumes trading.
Perpetual futures contracts have no expiration date. Investors take positions on whether an asset will rise or fall, often using leverage. Regular payments between investors help keep the contract’s price close to the underlying asset.
SEC and CFTC Uncertainty in Kalshi’s Stock Plan
The biggest question facing the plan is whether these products will be regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Although the contracts are futures in nature, the underlying assets will be US stocks under SEC oversight.
In May, Kalshi received CFTC approval for a perpetual futures contract tied to Bitcoin (BTC). While the CFTC classified the product as a futures contract, it noted that contracts tied to other asset classes must be reviewed individually. Therefore, the approval for Bitcoin does not constitute general authorization for stock-linked products.
Citadel Securities argued in a letter to the SEC and CFTC that contracts tied to US companies should remain under SEC oversight. The firm stated that a different regulatory structure could create a “parallel shadow market” disconnected from the stock and options markets.
According to Citadel, it could be possible for an insider to trade perpetual futures while the stock market is closed, or for significant news to affect the prices of these products while stock trading is halted. Therefore, there are ongoing discussions about how rules such as trading halts, order processing, and market access will be applied between the two markets.
There is currently no final regulatory approval for these stock-linked products, and trading has not yet begun. At the center of the debate is how the never-closing crypto trading model will be linked to the US stock market, which has limited trading hours.