Kalshi's derivatives market survives regulatory challenge from CFTC

Kalshi's stock perpetuals market survives after judge doubts CFTC authority

A federal judge ruled on Wednesday that the Commodity Futures Trading Commission probably lacked the statutory authority to approve Kalshi's stock perpetuals contracts, but declined to halt trading while the legal question is resolved.

The ruling creates an unusual situation: contracts the court considers likely unauthorized continue to trade under a regulator whose power to have approved them a judge now doubts. Kalshi launched the stock perpetuals product earlier this year as part of its expansion beyond political and economic event contracts into instruments that track equity prices continuously.

The judge's finding on the CFTC's authority is not a final determination. It is a preliminary assessment made in the course of deciding whether to issue an injunction. The court chose not to freeze trading, meaning the contracts remain live while the underlying legal dispute works forward.

For Kalshi, which is simultaneously defending its prediction market model against Utah prosecutors and Illinois regulators, the ruling adds a third front. The company now faces questions not only about whether its event contracts are legal under state law, but whether the federal agency it relies on for legitimacy had the power to greenlight its newest product class.