Regulatory Proposals for On-Chain Swap Reporting and Contract Definitions
Summary
The document summarizes Paradigm’s comments on joint SEC and CFTC requests about swap reporting and the definition of swaps and security-based swaps. It argues that reporting rules should focus on regulatory outcomes and allow credible public blockchain data to satisfy reporting requirements while keeping counterparty identities confidential. It also supports aligning overlapping agency requirements and using machine-readable rules. For decentralized transactions without a responsible intermediary, it argues that obligations should fall on participants rather than software, protocol developers, validators, or node operators that lack custody or control.
On product definitions, the comments distinguish contracts by their payout: a contract tied directly to a stock’s closing price would be a securities option, while one tied to an election, economic release, or operating measure would be a swap. The document also supports treating Bitcoin perpetuals, and potentially other perpetual contracts, as futures because they are standardized, fungible, traded under common rules, and linked to spot through a convergence mechanism. These are advocacy positions in regulatory comments, not final agency decisions or neutral legal guidance.
Key ideas
- The comments propose that verifiable public blockchain data could meet swap reporting requirements while preserving counterparty confidentiality.
- They favor harmonized, machine-readable rules where agency requirements overlap.
- They argue that reporting duties should attach to responsible participants or intermediaries, not non-custodial software infrastructure.
- They classify event contracts according to whether payouts directly reference a security’s price.
- They support classifying perpetual contracts as futures based on their standardized trading and spot-convergence features.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.