CME Plans to Sue CFTC Over Approval of Crypto Perpetual Futures

TLDR

• CME CEO Terrence Duffy announced CME will sue the CFTC over its approval of perpetual futures contracts
• Duffy argues perps are swaps under the Dodd-Frank Act, not futures — meaning they were approved through the wrong legal route
• The CFTC approved Kalshi’s BTCPERP contract on May 29 and also cleared Coinbase for crypto perps access
• CME, Cboe, and ICE shares fell after the CFTC opened the door to perpetual futures
• The CFTC called CME’s planned lawsuit “frivolous” and said it looks forward to addressing the claims

CME Group, one of the world’s largest derivatives exchanges, plans to sue the U.S. Commodity Futures Trading Commission. The lawsuit centers on the CFTC’s approval of crypto perpetual futures contracts.

CEO Terrence Duffy made the announcement on CNBC on Wednesday. He said the regulator approved these products through the wrong legal framework.

What Are Perpetual Futures?

Perpetual futures, often called “perps,” are derivatives with no expiration date. Traders can hold positions open without rolling into a new contract. They are common in offshore crypto markets and often allow high leverage, which can increase both gains and losses.

The CFTC approved Kalshi’s BTCPERP contract on May 29. It was listed as a futures contract on a designated contract market. Coinbase also received a regulated path for crypto perpetual products through its connection to Deribit, the derivatives exchange it acquired.

Kalshi’s perps volume topped $5.5 billion shortly after launch, showing strong demand for the product.

CME’s Legal Argument

Duffy argues that perpetual futures are legally swaps, not futures. Under the Dodd-Frank Act, when two parties exchange payments with each other, that meets the definition of a swap.

CME also holds exclusive licenses with benchmark providers. Duffy said products tied to those benchmarks should go through CME, even if they use a perpetual structure.

Duffy also accused the CFTC of misrepresenting facts. He pointed to the agency’s announcement around 24/7 trading, saying the CFTC described it as a rule when it was not one.

The CFTC responded through a spokesperson, calling the planned lawsuit “frivolous” and saying the agency looks forward to addressing the claims in court.

Market Reaction

Shares of CME, Cboe, and Intercontinental Exchange fell after the CFTC opened the door to perpetual futures. Investors are weighing whether new crypto products could pull trading volume away from established futures markets.

Duffy, who is stepping down from his CEO role next year, previously called U.S. crypto perps a “disaster waiting to happen.” He cited concerns around leverage, automatic liquidations, and funding-rate costs.

CME said it would need clarity on the rules before it considers listing its own perpetual futures contracts. Duffy said those rules are not “very clear” right now.

The lawsuit could affect how exchanges list crypto derivatives in the U.S. and how much room new entrants have to compete against large incumbent venues.

The post CME Plans to Sue CFTC Over Approval of Crypto Perpetual Futures appeared first on CoinCentral.