CME Group has taken legal action against the CFTC, arguing the regulator improperly approved Kalshi’s first U.S.-based perpetual futures product. The exchange is asking a court to overturn both the approval and the self-certified contracts tied to it.
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Futures or Swaps?
The Narrative
CME’s lawsuit centers on claims that the CFTC failed to adequately review Kalshi’s application before granting approval for its perpetual futures contracts. The filing follows remarks from outgoing CEO Terry Duffy, who signaled just a day earlier that the company would challenge the decision made in late May.
Why It Matters
It’s highly unusual for a major derivatives exchange like CME to sue its primary regulator. Perpetual futures—commonly known as “perps”—are still an emerging financial instrument, with deep roots in crypto markets. CME contends that the CFTC’s approval process did not meet the procedural standards required under Dodd-Frank and could negatively impact its core business.
Breaking It Down
At the heart of the dispute is classification. CME argues that perpetual contracts threaten its long-dated futures offerings and were incorrectly categorized. According to the lawsuit, these products should be treated as “swaps” under Dodd-Frank rather than “futures.”
This distinction carries significant regulatory consequences, as swaps and futures are governed by different rules and compliance frameworks. Duffy recently emphasized that the classification directly affects how market participants operate under the law.
The filing further claims that the CFTC failed to conduct an independent legal analysis when approving Kalshi’s Bitcoin perpetual contract as a futures product. Notably, CME points out that the regulator did not reference the Dodd-Frank definition of a “swap” at all, suggesting a lack of thorough evaluation.
Instead, CME alleges the agency effectively approved the application without sufficient scrutiny.
At the same time, momentum behind perpetual products is building. On the day Kalshi received approval, the CFTC also issued a no-action letter to Coinbase, potentially opening the door for similar offerings—likely structured through offshore channels.
Complicating matters is the fact that perpetual futures are not explicitly addressed in Dodd-Frank, leaving room for interpretation.
Katherine Kirkpatrick Bos, former general counsel at StarkWare, noted that while “swap” is clearly defined in the legislation, “future” is not—giving the CFTC flexibility in classifying new financial instruments. CME, however, maintains that the absence of an expiration date should disqualify perps from being treated as futures.
Bos has also highlighted that there is no well-established precedent requiring “future delivery” as a defining characteristic of a futures contract.
This Week
Tuesday
14:00 UTC (10:00 a.m. ET): The Senate Banking Committee will hold a hearing on “The Affordability Agenda,” featuring leaders from the Consumer Bankers Association, National Association of Realtors and the Digital Chamber.
Wednesday
14:00 UTC (10:00 a.m. ET): The House Financial Services Committee will host a hearing titled “Future of Payments,” with speakers yet to be announced.
Thursday
14:00 UTC (10:00 a.m. ET): The House Financial Services Committee will convene a session on “The Future of How America Invests.”
18:00 UTC (2:00 p.m. ET): A House Oversight subcommittee will hold a hearing focused on digital currencies.
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