Brad Bourque

Senior Counsel @HyperliquidPC. Prev: @Sullcrom, @RepRutherfordFL, @PrincetonFTBL. Posts ≠ legal or financial advice.

[Brad Bourque @BradBourque]

Timely story from @IanAllison123 on CME’s suit against the @CFTC. It quotes from @CMEGroup’s earnings call last week, where perpetual futures overshadowed record revenues.

Perps came up 35+ times, and were the topic of nearly half of analyst questions.

Along the way, CME’s CEO undercut the company’s own arguments against the @CFTC. 🧵

via @CoinDesk
https://t.co/P71ZY1mlAQ

[Jake Chervinsky @jchervinsky]

The path to regulatory clarity for innovative technology in the United States runs through the agencies, and they are still hard at work in Washington this month.

It's exciting to see the CFTC convene the IAC for its first meeting next week. This is where the action is. Tune in.

[Brad Bourque @BradBourque]

@perkinscr97 @SECGov Congratulations!

[Hyperliquid Policy Center @HyperliquidPC]

Farmers were the original beneficiaries of America’s derivatives markets.

Futures trading was born in the grain trade in the 1800s, and federal oversight ran through the U.S. Department of Agriculture for five decades. The House and Senate Agriculture Committees oversee the CFTC to this day.

On July 29, the @CFTC 's Agricultural Advisory Committee convened for the first time in more than two years. Today we filed a statement supporting the Committee’s work and the Commission’s phased approach to perpetual futures.

[Brad Bourque @BradBourque]

Today, @HyperliquidPC filed a statement in connection with the @CFTC Agricultural Advisory Committee’s July 29 meeting, its first in more than two years.

We support the Commission’s phased approach to perpetual futures and share our views on product choice and how public blockchains can help modernize our markets. ⬇️

[Hyperliquid Policy Center @HyperliquidPC]

https://t.co/2wWSg6mgxF

[Stefan Schropp @SPSchropp]

Good question. Here's a long effort at an answer:

For some, insurance is an option. Best recent example of this is probably La Liga club Osasuna, which bought insurance against its own relegation this year. MLB clubs certainly have access to something similar.

But PMs make that better. The insurance broker above immediately hedged its risk on prediction markets, without which the insurance contract undoubtedly would have been more expensive (or unavailable) to compensate for holding the exposure. (In an ideal world we wouldn't need the middle man, but I understand why that was appropriate there.)

And its not available to most. Pickles Pub outside Camden Yards or @MagicRatSF 's parking lot outside Veterans Stadium don't have access to that, and certainly not at anything close to the cost of PM fees. There are hundreds of mom-and-pops in 30 baseball cities that make or break their year on the season.

So even if insurance is available to all (and its not), all that does is turn one hedge (Company --> Prediction Market) into another (Company --> Insurance --> Prediction Market), adding a middle man and increasing costs.

As for insider trading, yes its a risk, but no more so than for (say) a public company earnings report or M&A transaction in my view. I don't think we assume that people act on those, and I wouldn't make that assumption here either (the owners/execs who would know have a LOT to lose).

[Salah Ghazzal @salahghazzal]

The skeptic's case against 24/7 markets usually centers on a single issue: a price formed at 3am on a Saturday couldn't possibly be trusted. Fair concern, but also a testable one.

New research from @blockworksres tracked weekend trading on Hyperliquid across equities, commodities, FX, and indices. Weekend spreads matched or ran tighter than weekday levels, and typical trades filled at close to weekday cost, even with every other venue closed.

Across 614 market-weekends, the weekend price landed closer to the eventual reopen than Friday's close 70.7% of the time. On moves over 1%, it called the direction right 94.9% of the time. About 83 cents of every dollar priced over the weekend showed up at the reopen.

The skeptic’s case was tested. The 3am price wasn’t just tradeable, it was right.

[Brad Bourque @BradBourque]

Great report from @shaundadevens and @Blockworks highlighting the price discovery occurring on Hyperliquid across asset classes.

24/7 markets require infrastructure that is always on, and Hyperliquid was built for exactly that.

Read the full report below.

[shaunda devens @shaundadevens]

https://t.co/b4W7Cdf2Ky

[Anastasia Golovina @itsgolovina]

CME in court: perps inflict "textbook competitive injury" by competing for its retail customers.

CME on this week's earnings call: "we have not heard demand from our customers for these products."

So which one is it?

[Brad Bourque @BradBourque]

8/ CME clearly can’t ignore perps any longer. But it has to pick a story.

To investors, CME says perps are “in no way substitutes” for what CME’s customers want. To the court, CME says they pose a competitive injury that must be stopped.

Which is it?

[Brad Bourque @BradBourque]

7/ Congress dealt with leveraged retail commodity products directly in Dodd-Frank.

Under CEA Section 2(c)(2)(D), commodity transactions offered to retail customers on leverage or margin are regulated “as if” they were futures contracts.

That's the category CME’s description invokes, and it’s at odds with its own lawsuit.

[Brad Bourque @BradBourque]

6/ Now the merits. CME’s complaint argues that perps are swaps. On the call, CME said perps actually function as “leverage[d] spot products” for “retail traders seeking high leverage.”

That description has a home in the CEA, and it isn’t the swap definition.

[Brad Bourque @BradBourque]

5/ CME’s CEO also called retail perp venues “an incubator system that I'm not paying for” that “could benefit CME greatly as time continues to move forward” and “feed right into the growth of CME’s retail business.”

In the courtroom, these venues are a competitive threat. But on the earnings call, they’re a growth engine.

[Brad Bourque @BradBourque]

4/ The longer history is more telling. Perps have traded alongside CME’s digital asset futures since those launched in 2017.

CME told investors its volumes on those products are up “over sevenfold” in three years “despite the existence of crypto perpetuals.”

Nine years of perps and dated futures growing side by side is evidence that these products are complementary.

[Brad Bourque @BradBourque]

3/ Start with standing. In court, CME says that perps will draw away its customers and inflict competitive injury.

On last week’s call, CME told investors its digital assets products grew 32% YoY in Q2 and 76% in June, “with perpetuals being introduced the last two weeks.”

Put differently, CME’s business continues to grow despite the CFTC authorizing U.S.-traded perps.

[Brad Bourque @BradBourque]

2/ CME’s suit against the CFTC relies on two theories:

Standing: CME claims that perps compete with its products, and that competition injures CME.

Merits: CME claims that perps are swaps under the CEA, and that the CFTC acted unlawfully by approving them as futures contracts.

The earnings call cut against both.

[Brad Bourque @BradBourque]

Timely story from @IanAllison123 on CME’s suit against the @CFTC. It quotes from @CMEGroup’s earnings call last week, where perpetual futures overshadowed record revenues.

Perps came up 35+ times, and were the topic of nearly half of analyst questions.

Along the way, CME’s CEO undercut the company’s own arguments against the @CFTC. 🧵

via @CoinDesk
https://t.co/P71ZY1mlAQ

[Hyperliquid Policy Center @HyperliquidPC]

Prediction markets topped $50 billion in trading volume last month, and the biggest names in traditional finance are moving in.

Today, with @multicoin, we filed a joint comment supporting the @CFTC 's proposed prediction markets framework.

These markets have grown up. The proposed framework gives them what they deserve: durable standards, known in advance, under one federal rulebook. Our comment expresses support for the Commission’s approach and offers two recommendations to make an already strong rulebook even more targeted.

Read it here:

[Brad Bourque @BradBourque]

The most contested question for prediction markets is who regulates them. More than a dozen states argue in court that these markets belong under state gaming laws.

But gambling laws police a house that profits when you lose. A derivatives exchange has no house; it matches buyers and sellers and earns the same fee either way. Congress saw the difference and gave the CFTC exclusive authority over event contracts, with one federal rulebook in place of a state-by-state patchwork.

Today, @HyperliquidPC and @multicoin filed a joint comment in support of the CFTC's proposal, with two refinements to make it even stronger. ⬇️

[Hyperliquid Policy Center @HyperliquidPC]

https://t.co/R4irnuDsgR

[Jeremy Allaire - jerallaire.arc @jerallaire]

This is a major structural shift, and possibly the turning point in the evolution of crypto markets away from speculating on endogenous digital commodities and into crypto market infrastructure underpinning deeper global markets. Thrilled to have Circle and USDC play such a central role here too.

[Adam Minehardt @adam_minehardt]

CLARITY is stalled exactly where the arithmetic puts it, and attention was never the problem.

5 of 8 steps are done: House passed it 294-134, Senate Banking advanced it 15-9, calendar-eligible since June 1. The last three (60 votes in Senate, House passage, POTUS signature) are the hard part, with no cloture motion filed and about three usable Senate weeks before the August recess.

Three disputes are doing the blocking: ethics/insider-trading, Section 604 developer liability, stablecoin yield. And unlike GENIUS, CLARITY has no bank-and-payments constituency forcing them shut. The real risk is inertia.

Polymarket has been the live whip count: ~59% in June, sub-40% after the July 4 miss, ~43% now. It's tracking the same disputes staffers are negotiating.

This isn't dead, and it's nowhere near guaranteed. The next three weeks are the closing act.