FalconX Bravo, a CFTC-registered swap dealer focused on digital assets, filed a proposal on Aug. 12 asking the SEC and CFTC to treat certain cash-settled perpetuals tied to a single security or a narrow-based security index as security-based swaps under SEC rules when they fall outside the joint SEC-CFTC security-futures framework. The request explicitly includes contracts offered through DeFi protocols. The public comment window closed on Aug. 24, but the proposal itself is not agency policy and commits neither regulator to rulemaking.
What the proposal covers
The definition applies to specified perpetuals and options on them, but does not extend to Bitcoin perpetuals or crypto perpetuals generally. Contracts listed as security futures products on an authorized market stay in the existing joint SEC-CFTC regime. FalconX's examples include bilateral and over-the-counter transactions, contracts offered by eligible venues, non-US venues, and comparable DeFi protocols.
What it would mean for dealers
For affected dealers, SEC treatment can trigger registration, business-conduct, transaction-reporting, capital, margin, and segregation requirements. But the proposal would not automatically force every protocol developer or trader to register. FalconX also asks the SEC to reduce duplicated requirements for firms already overseen by the CFTC, amending Rule 18a-10 to raise the combined-notional threshold for alternative compliance from 10% to 49%.
A different take from a commenter
Independent researcher Amadeus Brandes filed a comment on Aug. 21 recommending the existing mixed-swap process, with protections that address insider information, manipulation, leverage, and funding-rate risks. That approach would keep the products under the current joint framework rather than shifting them to SEC-only rules.
Where things stand
Closing the comment window changes no jurisdictional rule and commits neither agency to any next step. The CFTC's June policy statement reserved other asset classes for separate review, and it identified equity and narrow-index products as distinct regulatory questions. So the docket is now quiet, and any action depends on what the SEC and CFTC decide to do next.
