CME Group filed a lawsuit against the US Commodity Futures Trading Commission after the regulatory body approved cryptocurrency futures contracts that had already generated more than $1 billion in trading volume.
summary
- The Chicago Mercantile Exchange has filed a lawsuit against the Commodity Futures Trading Commission (CFTC), arguing that cryptocurrency futures should be regulated as swaps under the Dodd-Frank Act.
- The exchange alleges that the regulator bypassed congressional requirements when approving Calcci’s perpetual contracts.
- Legal experts say the CFTC may have the authority to classify new products, creating uncertainty over the CME case.
according to BloombergThe derivatives exchange has filed a lawsuit against the Commodity Futures Trading Commission (CFTC) and its chairman, Michael Selig, arguing that the agency improperly classified perpetual cryptocurrency contracts as futures rather than swaps.
The legal challenge comes days after several regulated perpetual products received approval in the United States, opening up a market long dominated by offshore exchanges.
Earlier this week, CME’s outgoing chief executive, Terence Duffy He said CNBC reported that the company is planning to take legal action after the regulator cleared platforms including Kalshi and Coinbase for offering regulated cryptocurrency futures.
Duffy argued that perpetual contracts fall within the category of swaps created by the Dodd-Frank Act and should not be treated as standard futures products.
The Chicago Mercantile Exchange said in its complaint that the CFTC has moved away from its historical approach to similar instruments. The exchange argued that the regulator had previously viewed perpetual-style products as swaps and that the recent approvals went beyond procedures Congress had established for this sector of the market.
The filing also alleges that the approval process did not go through formal rulemaking despite the creation of a new framework for permanent contracts. According to the complaint, President Selig effectively exceeded the statutory definitions set by Congress when authorizing the products.
The Chicago Mercantile Exchange challenges the classification of perpetual cryptocurrency contracts
At the heart of the dispute is Kalshi’s perpetual Bitcoin futures contract, which was received CFTC approval On May 29th. Depending on the regulator, the BTCPERP product can remain listed as long as it complies with the Commodity Exchange Act and current CFTC regulations.
While approving the contract, the CFTC also stated that perpetual structures may not be suitable for every asset class and noted that products will continue to be reviewed individually.
As previously reported by crypto.news, Kalshi subsequently expanded beyond Bitcoin-related contracts, launching additional cryptocurrency-related perpetual products including Ethereum, XRPand Excess fluid. The exchange has since revealed that its permanent futures business has generated more than… $5.5 billion trading volume Within weeks of launch.
Separately, crypto.news reported that Coinbase Believer A regulated way to offer certain perpetual futures crypto products in the US through infrastructure linked to Deribit, the derivatives exchange it has acquired.
CME’s complaint also cites intellectual property and licensing concerns. Duffy told CNBC that the CME holds exclusivity agreements with benchmark providers, and argued that related products should be routed through the CME regardless of whether they use a permanent structure.
Legal experts see uncertainty regarding CME claims
In response to the lawsuit, a CFTC spokesperson told Bloomberg that the CME chose to litigate rather than compete directly in the market. The spokesman described the challenge as opposition to the Trump administration’s pro-innovation regulatory approach, and said incumbents were resisting increased competition.
Legal analysis by StarkWare’s general counsel, Katherine Kirkpatrick, suggested the outcome may not be clear. In a June 18 post, it noted that the CFTC had previously treated perpetual products as swaps during its enforcement case against Binance, though it added that enforcement positions do not constitute a binding precedent.
Kirkpatrick also stated that federal law does not require the CFTC to take 45 days to reach a decision or maintain a quorum before acting, meaning the chair may have the authority to approve products independently.
Addressing CME’s competitive harm argument, she said the exchange would still need to prove actual harm and noted that offshore permanent trading venues are already competing with CME regardless of the agency’s decision.
According to Kirkpatrick, perpetual contracts remain a relatively new product category in the United States, which makes it unlikely that Congress will specifically address them when passing the Dodd-Frank Act.
“Perps are still new, which means Congress wasn’t supposed to process them when the Dodd-Frank Act was passed. The CFTC has discretion to classify new products, and its choice of futures versus swaps here is reasonable.”
