CME Group sues CFTC over U.S. perpetual futures approval

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CME sues CFTC over futures

Highlights

CME Group sued the CFTC and its chair Michael Selig, alleging improper approval of perpetual futures for Kalshi and Coinbase last month.
CME claims the CFTC bypassed Congressional oversight and the Commodity Exchange Act, harming CME's business by facilitating direct competition in crypto derivatives.
The CFTC rejects CME's claims as anti-competitive, while CME CEO Terrence Duffy announced plans to step down in 2027 amid the regulatory dispute.

Legal challenge over perpetual futures classification

The lawsuit was first reported by The Block, which said CME filed the case on Thursday in the U.S. District Court for the District of Columbia against the CFTC and its chair, Michael Selig. CME argues the agency abruptly changed course when it approved the first perpetual futures for Kalshi and Coinbase last month, allowing the products to trade in the U.S. for the first time.

In its complaint, Chicago Mercantile Exchange Inc. says the CFTC overrode Congress's definition of a swap and bypassed the regulatory framework required for that type of derivative. CME also says the newly approved products directly compete with its own offerings and cause harm to its business, while alleging the agency violated the Commodity Exchange Act in granting the approvals.

The complaint further criticizes the CFTC for not allowing public comment on Kalshi's application. CME CEO Terrence Duffy has also publicly opposed perpetual futures, telling CNBC on Wednesday that the contracts should be classified as swaps under the Dodd-Frank Act.

Competition debate in crypto derivatives

Perpetual futures, often called perps, are contracts without an expiration date that let traders bet on asset price movements without directly owning the underlying assets. The products have become increasingly popular in crypto derivatives markets, making their entry into U.S.-regulated trading a significant competitive and regulatory development.

The CFTC is forcefully rejecting CME's claims. In a statement emailed to The Block, a CFTC spokesperson says CME is choosing litigation instead of market competition and defends the Trump administration's pro-innovation agenda, adding that the agency expects the lawsuit to be dismissed.

Supporters of perpetual futures are also framing the case as a competition issue. Hyperliquid Policy Center says in a post on X that CME is trying to suppress competition, arguing that perpetual futures are the first genuinely new derivatives product to reach U.S.-regulated markets in more than a decade and that broader exchange competition benefits market users.

Duffy separately announces on Wednesday that he plans to step down from his post in 2027, adding a leadership transition to CME's escalating fight over the future of U.S. crypto derivatives regulation.

Our earlier article covered how Congress is considering tighter ethics limits as prediction markets like Kalshi draw more scrutiny in Washington. The proposal would bar lawmakers and their families from betting on policy, politics and elections, while imposing penalties for trades made with insider knowledge, and it faces an uphill path in the Senate.

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