CME Sues CFTC Chairman Michael Selig Over Kalshi Bitcoin Perpetual Contract Approval

CME filed a lawsuit against the Commodity Futures Trading Commission and CFTC Chairman Michael Selig, challenging the regulator’s decision last month to approve Kalshi’s Bitcoin perpetual contract as a futures product.

“The CME Group said that it plans to file a lawsuit against the Commodity Futures Trading Commission (CFTC) over the agency’s approval of crypto perpetual futures, setting up a direct legal confrontation between the world’s largest futures exchange operator and its own regulator”

Bitcoin Magazine

The complaint, filed in the U.S. District Court for the District of Columbia, targets the CFTC’s 29 May order approving Kalshi’s BTCPERP contract and the accompanying policy statement that opened the door for any futures exchange to self-certify similar cryptocurrency perpetuals without prior CFTC approval.

Bitcoin Magazine

CME argues the contract is a swap under the Commodity Exchange Act, saying perpetual contracts involve periodic funding payments between counterparties based on the value of a commodity, transfer price risk, and convey no ownership interest in the underlying asset.

CME draws its sharpest line on delivery, arguing that a “contract of sale of a commodity for future delivery” requires future delivery by its own terms, while a perpetual “never delivers anything.”

CNBC reported that outgoing CME CEO Terrence Duffy said the exchange operator will sue the CFTC over the agency’s move to approve perpetual futures, with the lawsuit to be filed on Thursday.

Duffy told CNBC’s “Fast Money” that perpetual futures are actually swaps under the Dodd-Frank Act, saying “when there’s two parties exchanging payments to each other, that’s deemed a swap.”

In the same dispute, Selig defended the CFTC’s approach on CNBC, saying, “It’s time to approve regulated futures contracts that have no expiration date,” and adding, “We’re going to make sure the product's available, but it's well regulated here in the U.S.”

CNBC

A Reuters-linked account in Bitcoin Magazine said the CFTC pushed back by calling CME’s threat “frivolous,” while a spokesperson told Reuters the agency looked forward to addressing the claims.

Bitcoin Magazine also reported that Duffy said he spent eight months preparing the challenge with CME’s board and argued the CFTC cleared a novel instrument faster than typical review procedures would allow.

CME’s position is tied to classification and market structure, with Duffy saying, “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 dispute centers on the CFTC’s late-May approval of Kalshi’s bitcoin perp contract as a first for the United States, after which Kalshi expanded its perps offerings to include other cryptocurrencies.

“Source: PACER The lawsuit came just one day after CME CEO Terrence Duffy said that the company would be taking legal action against the CFTC”

Cointelegraph

CNBC said the CFTC approved prediction market platform Kalshi in late May to begin offering bitcoin perpetual futures, or “perps,” which are futures contracts that have no expiration date but allow traders to speculate without owning the underlying asset.

Bitcoin Magazine added that the CFTC also cleared Coinbase to connect U.S. customers to offshore perpetual futures trading, while Selig said the agency was bringing a major segment of crypto derivatives activity under domestic regulation.

CME’s lawsuit arrives as another derivatives fight plays out in federal court, where a federal judge in the Western District of Michigan, Paul L. Maloney, denied Polymarket’s request for a preliminary injunction against Michigan regulators.

In that Michigan ruling, Maloney wrote that the agency’s interpretation of its own authority over derivatives was “so vast that it would encompass vast swaths of activity never understood to be associated with the financial industry,” underscoring how classification disputes can determine whether regulators have jurisdiction.