CME Group has sued the CFTC, arguing the regulator mishandled its approval of Kalshi’s first U.S. perpetual futures product. The exchange is asking a court to nullify both the approval and the self-certified contracts tied to it.

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Futures or Swaps?

The Narrative

The lawsuit claims the CFTC failed to properly review Kalshi’s application before approving its perpetual futures offering. The filing came just a day after CEO Terry Duffy signaled CME would challenge the late-May decision.

Why It Matters

It’s rare for a major exchange like CME to take legal action against its primary regulator. Perpetual futures, or “perps,” are still relatively new and closely tied to crypto markets. CME argues the CFTC’s process fell short of Dodd-Frank standards and could harm its core derivatives business.

Breaking It Down

At the center of the dispute is how perps are classified. CME contends these products threaten its long-dated futures and should be treated as “swaps” under Dodd-Frank—not “futures,” as the CFTC determined.

The distinction is critical, as each classification carries different regulatory requirements. Duffy recently noted that these definitions directly shape the rules governing market participants.

CME also argues the CFTC failed to conduct a thorough legal analysis when approving Kalshi’s Bitcoin perpetual contract, pointing out that the agency did not reference Dodd-Frank’s definition of a “swap” in its order.

Instead, the lawsuit claims, the regulator effectively rubber-stamped the application.

Meanwhile, the push into perpetual products is accelerating. On the same day Kalshi won approval, the CFTC issued a no-action letter to Coinbase, potentially paving the way for similar offerings—likely via offshore structures.

Perpetual futures are not explicitly covered under Dodd-Frank, adding further complexity. Katherine Kirkpatrick Bos, former general counsel at StarkWare, noted that while “swap” is clearly defined in the law, “future” is not—leaving room for interpretation. CME, however, argues that the lack of an expiration date should exclude perps from being classified as futures.

Bos has also said there is no clear precedent requiring “future delivery” as a defining feature of futures contracts.

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 on “Future of Payments.” Speakers have not yet been announced.

Thursday
14:00 UTC (10:00 a.m. ET): The House Financial Services Committee will hold a hearing on “The Future of How America Invests.”
18:00 UTC (2:00 p.m. ET): A House Oversight subcommittee will hold a hearing on digital currencies.

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