CME Group said it plans to file a lawsuit against the Commodity Futures Trading Commission (CFTC) over the agency’s approval of perpetual futures contracts for cryptocurrencies, setting up a direct legal showdown between the world’s largest futures exchange operator and its regulator.
CME’s outgoing CEO, Terence Duffy, made the announcement on CNBC’s Fast Money program. Saying The company will file a lawsuit today. CME later confirmed these plans to Reuters. The lawsuit targets the decision by the Commodity Futures Trading Commission (CFTC) in late May to allow prediction market platform Kalshi displays Perpetual Bitcoin futures – the first of its kind in the United States.
At the heart of the legal argument is a dispute over classification under the Dodd-Frank Act. Duffy emphasizes that perpetual futures contracts, known as “PERS,” are not futures contracts at all but swaps, and are therefore subject to a different set of clearing, reporting, and trading venue requirements.
“Under the Dodd-Frank Act, it defines what a swap is and what the future is, and when you have two parties exchanging payments to each other, that is a swap,” Duffy told CNBC.
Perpetual futures contracts are derivative contracts that do not have an expiration date. Instead of settling on a specific date, they rely on periodic funding payments exchanged between traders. Products can carry leverage of up to 50 to 1, magnifying gains and losses. These coins have long been stable on offshore cryptocurrency exchanges, and have not previously been offered through local regulated venues in the US.
Kalshi and Coinbase have received CFTC clearance
The CFTC changed that in late May when it approved Bitcoin’s Kalchi contract. The agency then authorized Coinbase to connect US customers to trading perpetual futures contracts abroad. Michael Selig, head of the Commodity Futures Trading Commission (CFTC), has defended both decisions as a way to bring a significant portion of cryptocurrency derivatives activity under domestic regulation.
“It’s time to approve regulated futures contracts that don’t have an expiration date,” Selig told CNBC’s Fast Money earlier this week. “We will make sure the product is available, but it is well regulated here in the United States.”
The Commodity Futures Trading Commission (CFTC) responded to the legal threat made by the Chicago Mercantile Exchange (CME). Official spokesman He said The agency looked forward to addressing these allegations and described the lawsuit as “frivolous.”
Duffy said he spent eight months preparing the challenge with CME’s board and made clear that the company viewed the approval process itself as flawed, arguing that the CFTC approved a new instrument faster than typical review procedures would allow.
He also pointed to CME’s exclusive licenses on key market standards, arguing that competing perpetual contracts would need to go through CME regardless of how products were classified.
“We have an exclusive license with each standards provider,” Duffy said. “All of these things have to go through continuing medical education regardless of whether they continue.”
The announcement came on the same day that CME appointed Duffy’s successor. He will step down in March 2027, handing over the CEO role to President and CFO Len Fitzpatrick, who will serve as CEO. becomes CME’s first female CEO.
The Chicago Mercantile Exchange’s lawsuit arrived on what was a difficult day for the CFTC on another front. Federal Judge for the Western District of Michigan, Paul L. Maloney, to reject Polymarket sought a preliminary injunction against Michigan regulators and ruled that predictive market bets related to sports are not swaps and therefore fall outside the jurisdiction of the CFTC.
Maloney wrote that the agency’s interpretation of its authority over financial derivatives was “so broad that it may include broad swaths of activity that were never understood to be associated with the financial industry.”
