On June 18, 2026, the SEC and CFTC jointly issued a Request for Comment on whether the definitions governing swaps, security-based swaps, mixed swaps, and related exclusions remain adequate for today’s markets.[i] Comments are due August 24, 2026.
Under Title VII, how a product is classified determines which regulator has jurisdiction, which registration applies, what you report, how you margin, and how you’re taxed. For firms operating in event contracts, perpetual futures, tokenized debt, or cross-asset structures, the definitional question can determine the business model. The RFC is a response to market developments the 2012 rules were not designed to address.[ii] The boundaries between swap, security-based swap, and futures are blurring in ways that existing guidance does not resolve.
The agencies are seeking input from market participants on how those lines should be drawn for a new generation of products.
Key Takeaways
- The agencies are open to new rules, not just interpretive clarification. The RFC explicitly asks whether the Commissions should issue new or revised rules to address innovative products and structures. Market participants with a stake in how those questions are answered are well positioned to engage before any proposal is drafted.
- For dually-regulated firms, the alternative compliance section could trigger a fundamental rethinking of how compliance programs are structured. The RFC asks whether satisfying one Commission’s requirements could discharge the other’s entirely across registration, reporting, margin, and surveillance. If the answer that emerges from this process is yes, the operational implications are significant.
- The reason classification has become so difficult is not ambiguous statutory language. It is that modern financial products are no longer unified instruments. Programmable infrastructure has made it possible to decompose ownership, economic exposure, governance, and settlement into independently configurable layers. Title VII’s definitions were not written for instruments where those attributes can be separated, recombined, and re-referenced independently. That is the structural mismatch the RFC is asking the market to help address.
Why the Classification Question Has Become Harder
Classification has become harder because modern financial products built on programmable infrastructure decompose ownership and economic exposure into independently configurable layers that can be separately transferred, re-referenced, or withheld.
A tokenized fund interest illustrates the point. The holder acquires legally cognizable ownership of a token carrying a defined bundle of rights: transfer rights, governance rights, and economic entitlement to the performance of an underlying portfolio. Those rights are not a unified package. They are separately programmable attributes. Economic exposure to the underlying assets is one layer. Governance rights are another. Settlement mechanics are a third. Each can be independently addressed, re-referenced to a different counterparty, or stripped from the instrument altogether without disturbing the others.
The same structural logic runs through synthetic assets, on-chain derivatives, and event contracts. An instrument may confer full legal title while providing no economic exposure to its nominal reference asset. A smart contract position may replicate the economics of ownership without conveying any of its legal attributes. Rights and exposures that would be inseparable in a conventional instrument can be disaggregated and recombined in configurations that have no precedent in existing regulatory frameworks.
Title VII’s definitional framework was built to classify products based on what an instrument does as a whole. The products now being submitted to that framework are not unified instruments. They are modular stacks. The same combination of layers may constitute a security, a swap, an SBS, or a commodity interest depending on which layer is examined and how the components are assembled. That mismatch is what the RFC is asking market participants to help identify and address.
What the RFC Is Asking
The RFC poses 15 questions organized around three topics: definitional clarity, alternative compliance, and a general data request. Running through all of them is a single unresolved problem. When a financial instrument separates rights and exposures into independently addressable layers, which layer controls the classification analysis, and under which regulatory framework?
Event contracts and the SBS Event Contract Prong. For event-contract structuring, this may be the most actively contested definitional question. The SBS Event Contract Prong provides that an agreement may constitute a security-based swap if, among other threshold requirements, it is based on “the occurrence, nonoccurrence, or extent of the occurrence of an event relating to a single issuer of a security” that “directly affects the financial statements, financial condition, or financial obligations of the issuer.”[iii] That formulation extends well beyond instruments resembling credit default swaps.
Consider a simple example: is an event contract that pays out if a public company receives FDA approval for a major product in a given quarter a swap or an SBS? The event references an issuer. A favorable outcome could directly affect the company’s financial condition and future obligations. But the contract is structured as a binary payout on a regulatory event, not as an instrument based on the value of a security. The existing guidance on the SBS Event Contract Prong addresses instruments resembling credit default swaps but does not resolve how the “directly affects” standard applies to binary event contracts of this kind. Where a contingent payout is one programmable layer of a multi-component instrument, the analysis becomes more complex still. A separate but related question is whether certain event contracts qualify as binary options on securities and therefore fall outside the swap definition entirely.[iv]
The Commissions’ response on both points will be monitored closely by anyone structuring contingent-payout products and by the parties in CME v. CFTC, which presents a parallel fight over adjacent definitional lines.[v]
Perpetual contracts. Question 11 asks whether a cash-settled perpetual contract referencing an equity security could be treated as a security future.[vi] The CFTC’s May 2026 Kalshi Order and Staff Letter No. 26-17 addressed this for a bitcoin-referenced contract and certain specified non-U.S. perpetuals referencing digital commodities with deep, active spot markets but did not answer the equity-reference version posed in Question 11.[vii] CME filed suit against the CFTC on the same day the RFC was issued, arguing that bitcoin perpetual futures should be classified as swaps rather than futures.[viii] That dispute overlaps with the same classification lines the RFC is exploring, and a court decision in that matter could arrive before any rulemaking does. The answer will determine registration requirements, margin and clearing treatment, and Section 1256 tax characterization for products currently in development.[ix]
Perpetual contracts also present a clear instance of the modular product problem. Their economic character derives from a funding rate mechanism, a periodic payment layer that keeps the contract price tethered to spot, that has no structural precedent in the traditional futures framework. It is that layer whose classification is in dispute.
Tokenized debt and structured products. Questions 9 and 10 address the note and bond exclusion from the swap definition and the physical settlement forward exclusion.[x] As tokenized private credit, structured finance products, and fund interests with debt-like characteristics become more common, the contours of the note and bond exclusion will affect structuring decisions and swap dealer registration analysis across a range of transactions.
The relevant questions include whether a lender-borrower relationship is required and what role Trust Indenture Act qualification plays.[xi] The physical settlement forward exclusion raises similar issues for real-world asset platforms and tokenized securities where deferred delivery is part of the product design. This is the modular product problem applied directly to the exclusion: in a tokenized instrument, the on-chain transfer of a token and the legal transfer of the underlying asset are separate layers that can occur independently.
When a token representing a real-world asset transfers automatically on a blockchain, the mechanical certainty of that transfer does not resolve whether it constitutes physical delivery in the statutory sense. The token may move instantly, but whether the underlying asset (a warehouse receipt, a real estate interest, a debt instrument) has legally transferred in the way the exclusion contemplates is a question the 2012 rules do not address.
Mixed swaps and cross-asset products. Questions 3 through 7 address the definitional lines between swaps, SBS, and mixed swaps.[xii] Instruments that blend interest rate, equity, and commodity exposures, or that reference multiple asset classes within a single structure, are directly implicated. Classification as a mixed swap can trigger joint SEC and CFTC regulation, with all the compliance complexity that entails. The line between an SBS and a mixed swap can turn on payment mechanics and drafting rather than economic substance. Two instruments with identical economic exposure may be classified differently depending on how the non-securities component is structured within the contract. That sensitivity to form over substance is precisely what the modular product problem predicts, and it is one of the areas where new guidance could have the broadest practical effect.
Alternative compliance. Questions 12 through 15 ask whether compliance with one Commission’s framework could, in appropriate circumstances, satisfy substantially similar requirements of the other across registration, reporting, margin, and surveillance.[xiii] For firms currently managing two parallel compliance programs, this may be the most consequential section of the RFC. But the question is harder than it looks. The SEC and CFTC do not regulate the same risks. The SEC’s framework centers on disclosure and investor protection; the CFTC’s on market integrity and systemic risk management.
Whether “substantially similar” means formally identical rules, or requirements that address the same underlying regulatory concern through different mechanisms, is itself an open question the RFC does not answer. For a product at the jurisdictional boundary, resolving that question requires the agencies to specify what they are actually trying to regulate with each requirement, which is an analytically demanding exercise that the existing framework has never needed to perform. For firms, the practical implication is that alternative compliance is unlikely to function as a blanket permission. It could require product-specific analysis demonstrating that the substituted framework addresses the same regulatory objectives.
Firms that have experienced duplicative or conflicting obligations directly should articulate that experience in concrete terms. That is the input the agencies are asking for, and it is the input most likely to shape how “substantially similar” gets defined.
Practical Considerations
- Ask whether your legal analysis addressed each layer of the product, or the product as a whole. Many existing classification analyses were built around the assumption that a product is a unified instrument. For products built on programmable infrastructure, that assumption may not hold. Economic exposure, ownership, governance, and settlement can each point to a different regulatory answer. If your existing analysis did not address each of those attributes independently, it may need to be revisited.
- Identify which exclusions your products rely on. A significant portion of the RFC is devoted to the exclusions from the swap definition: the note and bond exclusion, the physical settlement forward exclusion, and the securities option exclusion.[xiv] Products structured to fall outside the swap definition by relying on one of those exclusions should be reviewed in light of the questions being asked, as the agencies are soliciting comment on whether those exclusions need to be clarified or redrawn.
- If you have exposure to the perpetual contract classification question, track the litigation as well as the rulemaking. CME v. CFTC is proceeding in parallel with this RFC and overlaps with the same perpetual-contract classification debate. The litigation timeline and the rulemaking timeline are independent, and each could produce outcomes that affect product classification before the other concludes.
- For dually-regulated firms, document the friction now. The alternative compliance section is asking market participants to describe specifically where overlapping SEC and CFTC obligations create duplicative or conflicting requirements. Firms that have experienced that friction directly should begin documenting it in terms that could inform a comment submission.
- Treat the comment deadline as a product strategy deadline, not just a legal one. The definitional lines the agencies draw could affect what products can be confidently structured within a regulated framework going forward. Engaging before August 24 is the mechanism for influencing what those lines look like.
Looking Ahead
The RFC does not change the rules. What it does is put them into active reconsideration and signal that the agencies are prepared to revise them based on what market participants say. Product classifications that are treated as settled today may need to be revisited if rulemaking follows this process. The record that determines what those rules look like is being built right now, and it closes August 24.
[i] Joint Request for Comment on Further Definition of “Swap” and “Security-Based Swap” and on Alternative Compliance, Release No. 33-11424, 34-105735, File No. S7-2026-21 (June 18, 2026), available at https://www.sec.gov/files/rules/other/2026/33-11424.pdf.
[ii] Further Definition of “Swap,” “Security-Based Swap,” and “Security-Based Swap Agreement”; Mixed Swaps; Security-Based Swap Agreement Recordkeeping, 77 Fed. Reg. 48,208 (Aug. 13, 2012) (the “2012 Product Definitions Release”).
[iii] 15 U.S.C. § 78c(a)(68)(A)(iii).
[iv] RFC at Question 8. The relevant exclusion is set forth at 7 U.S.C. § 1a(47)(B)(iii) (excluding from the swap definition any put, call, straddle, option, or privilege on any security subject to the Securities Act of 1933 and the Securities Exchange Act of 1934).
[v] Chicago Mercantile Exchange Inc. v. Michael S. Selig and Commodity Futures Trading Commission, Case No. 1:26-cv-02157 (D.D.C., filed June 18, 2026).
[vi] RFC at Question 11.
[vii] In the Matter of the Request for Approval by KalshiEX LLC of the BTCPERP Futures Contract, Order Approving KalshiEX LLC BTCPERP Futures Contract (May 29, 2026); CFTC Staff Letter No. 26-17, Market Participants Division, Staff Interpretive Letter Regarding the Categorization of Deribit Perpetuals as Foreign Futures (May 29, 2026).
[viii] See supra note 5.
[ix] See 26 U.S.C. § 1256 (providing mark-to-market treatment and a 60/40 long-term/short-term capital gain split for regulated futures contracts listed on designated contract markets; treatment as a swap would remove eligibility for this characterization).
[x] RFC at Questions 9 and 10. The note and bond exclusion is set forth at 7 U.S.C. § 1a(47)(B)(vii). The physical settlement forward exclusion is set forth at 7 U.S.C. § 1a(47)(B)(ii).
[xi] 15 U.S.C. §§ 77aaa-77bbbb (Trust Indenture Act of 1939).
[xii] RFC at Questions 3-7.
[xiii] RFC at Questions 12-15.
[xiv] 7 U.S.C. § 1a(47)(B)(vii) (note and bond exclusion); 7 U.S.C. § 1a(47)(B)(ii) (physical settlement forward exclusion); 7 U.S.C. § 1a(47)(B)(iii) (securities option exclusion).
