CFTC moves to dismiss CME's perpetual futures lawsuit, citing lack of financial injury
Chicago Mercantile Exchange is in focus after the Commodity Futures Trading Commission filed a motion Wednesday asking a federal judge to dismiss the exchange's legal challenge to cryptocurrency perpetual futures. The…
Key takeaways
- The CFTC filed a motion Wednesday asking a federal judge to dismiss CME's legal challenge to cryptocurrency perpetual futures, arguing CME lacks standing because it has shown no financial harm.
- The dispute stems from the CFTC's May 29 approval of Kalshi's Bitcoin perpetual contract, which CME challenged on June 18 as improperly approved as a future rather than a swap.
- The CFTC's motion targets standing rather than the classification question, noting the May order let any CFTC-registered designated contract market, including CME, list perpetual futures.
- The CFTC cited CME data showing August trading volume exceeded May volume for Bitcoin, Micro Bitcoin, Ethereum, and Micro Ethereum futures, though the court has not assessed that conclusion.
- A ruling for the CFTC would close CME's challenge before the underlying swap-versus-future classification question is ever adjudicated.
Chicago Mercantile Exchange is in focus after the Commodity Futures Trading Commission filed a motion Wednesday asking a federal judge to dismiss the exchange's legal challenge to cryptocurrency perpetual futures. The CFTC argued CME has not demonstrated financial harm or increased competition from the agency's May decision to approve Kalshi's Bitcoin perpetual contract, and its attorneys described the lawsuit as "much ado about nothing."
The dispute traces to May 29, when the CFTC approved the Kalshi contract, bringing a product long associated with offshore crypto trading into the regulated U.S. market. Perpetual futures let traders hold leveraged long or short positions indefinitely, with funding payments between participants keeping contract prices aligned with the underlying spot market. CME announced its challenge on June 18, arguing that a contract with no expiration or delivery date fits the Commodity Exchange Act's definition of a swap rather than a future, and that it therefore went through the wrong approval process.
The CFTC's motion targets standing rather than the classification question itself. Its argument is that the label has not harmed CME, because the May order opened perpetual futures listing to any CFTC-registered designated contract market, CME included. CME executives stated publicly, the agency noted, that their customers had not requested perpetual futures and that the contracts were not substitutes for the exchange's institutional hedging products. The CFTC also cited CME figures showing August trading volume exceeded May volume for Bitcoin, Micro Bitcoin, Ethereum, and Micro Ethereum futures. The court has not assessed that conclusion.
A ruling for CME would not resolve the claimed harm anyway, the CFTC added. Exchanges could certify the same contracts as swaps through a separate channel, or structure long-dated futures to produce comparable economics.
What to watch
Kalshi has already extended the product line. After the May approval, it filed to certify perpetual contracts on 12 altcoins, including Ethereum, XRP, Solana, and Dogecoin. In August it filed to add a perpetual future tracking copper prices, though the CFTC said contracts tied to asset classes outside digital commodities require individual review. Polymarket had also signaled plans to enter the perpetual futures market in April.
CFTC Chairman Michael S. Selig and the commission are the named respondents in the suit. The court's ruling on the dismissal motion is the next definitive development. A decision for the CFTC would close CME's challenge before the underlying classification question is ever adjudicated.
Related reading
Filed via finance.yahoo.com