- CME Group plans to file a lawsuit against the U.S. Commodity Futures Trading Commission (CFTC) over its approval of Kalshi’s perpetual futures products.
- CEO Terrence Duffy argues that perpetual futures should be classified as swaps under the Dodd-Frank Act rather than futures contracts.
- The dispute follows the CFTC’s approval of Kalshi’s bitcoin perpetual futures in late May, marking the first regulated perpetual futures product approved in the United States.
- Duffy said CME has been preparing its legal challenge for approximately eight months and expects to file the lawsuit on Thursday.
CME Announces Legal Challenge Against CFTC
CME Group Chief Executive Officer Terrence Duffy said the derivatives exchange operator plans to sue the U.S. Commodity Futures Trading Commission (CFTC) over the regulator’s decision to approve perpetual futures products in the United States.
Speaking on CNBC’s “Fast Money” on Wednesday, Duffy said CME intends to file litigation on Thursday, arguing that the CFTC’s approval of Kalshi’s perpetual futures contracts does not align with the requirements established under the Dodd-Frank Act.
Duffy, who is scheduled to step down as CME Group CEO in March 2027, said he has been working with the company’s board on the legal challenge for approximately eight months. Describing the dispute as a significant regulatory issue, he said he was “always up for a good battle” and confirmed CME intends to file the lawsuit on Thursday.
The dispute centers on the legal classification of perpetual futures, commonly known as “perps,” which are futures contracts that do not have an expiration date. These products allow traders to gain exposure to price movements without owning the underlying asset.
Duffy said the contracts approved by the CFTC should instead be treated as swaps under federal law.
“Under the Dodd-Frank Act, it clearly defines what a swap is and what a future is, and when there’s two parties exchanging payments to each other, that’s deemed a swap,” Duffy said during the interview.
According to Duffy, if the products are determined to be swaps rather than futures, they would be subject to a different regulatory framework and participant requirements.
Kalshi Approval Marks Major U.S. Perpetual Futures Milestone
The legal challenge follows the CFTC’s approval of prediction market platform Kalshi in late May to offer bitcoin perpetual futures. The decision represented a significant development for U.S. derivatives markets because perpetual futures have long been available on offshore cryptocurrency exchanges but had not previously received approval within the United States.
Following the initial authorization, Kalshi expanded its perpetual futures offerings to additional cryptocurrencies, further increasing the importance of the regulatory decision for the broader digital asset market.
The launch follows the CFTC’s approval of Kalshi’s bitcoin perpetual futures product, marking the first regulated crypto perpetual futures offering available in the United States.
Kalshi’s expansion followed a strong early market response. The platform generated more than $5.5 billion in perpetual futures trading volume within the first two weeks of launch, underscoring growing interest in the newly approved product category in the United States.
Duffy said CME is seeking clarity on how perpetual contracts should be regulated before considering whether to launch similar products.
“We need to understand what the rules of the road are first,” Duffy said, adding that the current regulatory framework is not sufficiently clear.
He also criticized the CFTC’s broader regulatory approach, including recent discussions surrounding 24/7 trading, arguing that certain agency statements had characterized proposals as rules when they had not formally become rules.
CME Cites Benchmark Licensing and Regulatory Concerns
Duffy said CME’s lawsuit will focus on whether perpetual futures fit the legal definition of futures contracts under U.S. law.
He noted that CME maintains licensing agreements with benchmark providers and argued that any products ultimately classified as swaps would need to comply with the relevant regulatory requirements governing swap markets.
Duffy said:
“We have an exclusive license with every single provider of the benchmarks. So all of these would have to go through CME regardless of the perpetual”.
The CME chief also revealed that discussions regarding a legal challenge had been underway with the company’s board for approximately eight months.
“I’ve never shied away from one, and I won’t shy away from this,” Duffy said, confirming CME’s intention to proceed with litigation.
The CFTC did not immediately comment on the planned lawsuit. The dispute comes only days after CFTC Chair Michael Selig publicly defended the agency’s decision to permit perpetual futures trading in the United States. During a separate CNBC appearance earlier this week, Selig said regulated perpetual futures contracts should be available domestically while remaining subject to appropriate regulatory oversight.
If filed, the lawsuit would create a significant legal and regulatory test for the future of perpetual futures in the United States and could influence how digital asset derivatives are classified and supervised under existing federal law. Recently, Kalshi has introduced employment verification requirements for users seeking access to certain higher-risk prediction markets.
