Jake Chervinsky accused CME Group of using a lawsuit against US cryptocurrency futures to protect its position in a market where the exchange is said to control about 92% of the volume of derivatives traded on the exchange.
summary
- Jake Chervinsky called the Chicago Mercantile Exchange’s lawsuit against the CFTC a “shocking misjudgment” and “unforced error.”
- The Hyperliquid Policy Center cited Better Markets data showing that the Chicago Mercantile Exchange controls about 92% of the volume of derivatives traded on the US exchange.
- The Chicago Mercantile Exchange says cryptocurrency futures should be regulated as swaps, while regulators review definitions of derivatives under the Dodd-Frank Act.
According to Jake Chervinsky, CEO of the Hyperliquid Policy Center, the Chicago Mercantile Exchange’s legal challenge against the U.S. Commodity Futures Trading Commission has exposed what he sees as resistance to growing competition in the financial derivatives market.
On June 19th mail On He wrote that the exchange had exposed itself as a “little monopoly fearful of competition” after being viewed for years as a dominant force in US derivatives markets.
His comments came after CME Group filed a lawsuit against the CFTC and Chairman Michael Selig over the regulatory body’s approval of cryptocurrency futures products in the US. As previously reported by crypto.news, CME He argues The agency incorrectly classified perpetual contracts as futures contracts rather than swaps under the framework established by the Dodd-Frank Act.
The case comes on the heels of the launch of regulated perpetual futures products which, according to previous crypto.news reports, have already generated more than $1 billion in trading volume.
Hyperliquid argues that CME is resisting new competition
In its June 18 post, the Hyperliquid Policy Center cited Better Markets data indicating that the Chicago Mercantile Exchange accounts for approximately 92% of the volume of derivatives traded on the US exchange.
“The Chicago Mercantile Exchange manages about 92% of the derivatives traded on the US exchange. When one place holds this much volume, everyone bears the cost. Less options, higher prices.”
Pointing to the history of perpetual futures trading, the group said US traders had for years been forced to access similar products through overseas venues while regulated versions remained unavailable domestically. The statement added that regulators have only recently created a compliant path for these products to enter the US market.
Chervinsky said the CME’s decision to sue the regulator showed that the exchange was trying to defend its current position as competition entered the market. According to the Hyperliquid Policy Center, perpetual futures represent the first truly new derivatives product to hit regulated US markets in more than a decade.
Citing comments from CFTC Chairman Michael Selig, the Hyperliquid Policy Center also argued that incumbents often resist new competition. The organization quoted Selig as saying that “special interests always fear the future” while emphasizing that market participants should not be afraid of incumbents.
The Chicago Mercantile Exchange says that perpetual contracts belong to the swap rules
CME has offered a different view in court filings and public statements.
like I mentioned According to crypto.news earlier, the exchange asserts that perpetual futures contracts should be regulated as swaps instead of traditional futures contracts.
Earlier this week, CME’s outgoing chief executive, Terence Duffy He said CNBC reported that the company planned to take legal action after the Commodity Futures Trading Commission (CFTC) cleared platforms including Coinbase and Kalshi for offering regulated cryptocurrency futures.
Duffy argued that perpetual contracts fall within the category of swap created by Dodd-Frank. In its complaint, the CME also alleged that the CFTC departed from its historical treatment of similar instruments and approved a new type of product without following the rulemaking process established by Congress.
At the same time, the dispute is unfolding as US regulators reconsider the definitions at the center of the lawsuit. The CFTC and SEC have now opened a Joint public consultation Get comments on how swaps, security-based swaps, hybrid swaps, and other derivatives products are classified under Title VII of the Dodd-Frank Act.
CFTC Chairman Michael Selig said the review could help resolve “long-standing ambiguity” in the law, while SEC Chairman Paul Atkins said additional clarification was overdue.
The consultation remains open for public comment for 60 days after its publication in the Federal Register, as regulators seek input on how to treat modern derivatives products under existing rules.
