CME Group plans to sue the Commodity Futures Trading Commission over the agency’s approval of perpetual futures in the United States.
Summary
- CME says the CFTC approved crypto perpetual futures through the wrong legal route for markets.
- Duffy argues perps are swaps, while the CFTC approved Kalshi’s BTCPERP as a futures contract.
- Kalshi and Coinbase now face a legal fight after gaining regulated access to crypto perps.
Outgoing CEO Terrence Duffy said on CNBC that the exchange operator will file the case after the regulator cleared platforms such as Kalshi and Coinbase to offer regulated crypto perpetual futures.
Duffy said CME does not accept the CFTC’s treatment of the products as ordinary futures. He argued that perpetual futures should be treated as swaps under the Dodd-Frank Act.
He also said CME has exclusive licenses with benchmark providers, adding that related products should go through CME even if they use a perpetual structure. The claim puts CME in direct conflict with the regulator that oversees U.S. derivatives markets.
Duffy questions CFTC process
Perpetual futures, often called perps, are derivatives with no expiration date. Traders can keep positions open without rolling into a new contract. The products are common in offshore crypto markets and often allow high leverage, which can increase gains and losses.
Duffy said CME had been working on its challenge with its board for months. He told CNBC, “I’ve never shied away from one, and I won’t shy away from this.” Reuters reported that a CFTC spokesperson said the agency looked forward to addressing the claims and called the planned lawsuit “frivolous.” Duffy also said the CFTC moved too fast when approving a product he views as complex.
Crypto perps move onshore
The dispute follows the CFTC’s May 29 approval of Kalshi’s BTCPERP contract, a bitcoin perpetual product listed by a designated contract market. The regulator said Kalshi must keep the contract in line with the Commodity Exchange Act and CFTC rules. It also said perpetual design may not suit every asset class and called for product review when needed.
As crypto.news reported earlier, Kalshi won CFTC approval to launch the first U.S. Bitcoin perpetual futures contract, while Coinbase also received a regulated path for some crypto perpetual products. According to an earlier crypto.news report, Coinbase was cleared to offer U.S. access to crypto perpetual futures through a route tied to Deribit, the derivatives exchange it acquired.
Exchange battle widens
The case adds pressure to an already tense U.S. derivatives market. CME, Cboe and Intercontinental Exchange shares fell after the CFTC opened the door to perpetual futures, as investors weighed whether new crypto products could draw trading away from older futures markets.
In a previous crypto.news report, Duffy called U.S. crypto perps a “disaster waiting to happen”, citing leverage, automatic liquidations and funding-rate costs. crypto.news previously reported that Kalshi’s perps volume topped $5.5 billion soon after launch, showing why the new market has drawn both demand and opposition.
The outcome could shape how exchanges list future crypto derivatives, how benchmarks are used, and how much room new entrants have against large incumbent venues.
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