The battle over cryptocurrency derivatives in the United States is set to intensify after CME Group announced plans to sue the Commodity Futures Trading Commission (CFTC) over the regulator’s approval of Bitcoin perpetual futures.
In an appearance with CNBC on June 17, CME Group CEO Terry Duffy revealed that the exchange operator will file litigation against the CFTC, arguing that perpetual futures contracts are being incorrectly classified under U.S. law.
CME challenges CFTC’s interpretation of perps
The dispute centers on the CFTC’s decision in late May to allow prediction market platform Kalshi to launch bitcoin perpetual futures contracts in the United States.
Perpetual futures, commonly known as “perps,” are derivative contracts that allow traders to speculate on an asset’s price without owning the underlying asset and without a fixed expiration date. The products have become increasingly popular on offshore crypto exchanges but have historically faced regulatory hurdles in the U.S.
According to Duffy, CME believes these products should not be treated as traditional futures contracts. “Perpetual futures are actually swaps under the Dodd-Frank Act,” Duffy said during the CNBC interview, adding that this interpretation forms the foundation of CME’s legal challenge.
He also argued that CME’s existing licensing arrangements further complicate the approval process for competing perpetual products. “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,” Duffy said. He added that if regulators ultimately determine the products can be listed, they should be categorized as swaps rather than futures.
The outgoing CME chief also disclosed that the exchange has been working with its board on the issue for approximately eight months, signaling they are prepared for a prolonged legal fight.
“We will be filing this litigation tomorrow because we are not taking this lightly,” Duffy added.
CFTC defends domestic perpetual futures
Duffy’s remarks come just days after CFTC Chairman Michael Selig defended the agency’s decision to permit perpetual futures products in the U.S.
Selig stated, “It’s time to approve regulated futures contracts that have no expiration date,” adding, “We’re going to make sure the product’s available, but it’s well regulated here in the U.S.”
The upcoming lawsuit could have far-reaching consequences for the future of crypto derivatives regulation in the United States. If CME succeeds, regulators may be forced to reconsider whether perpetual contracts fall under futures regulations or should instead be treated as swaps under the Dodd-Frank framework. Such a decision could significantly alter compliance requirements, market access, and the competitive landscape for firms seeking to offer perpetual crypto products.
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