CME Group to Sue CFTC Over Approval of Bitcoin Perpetual Futures in Violation of Dodd-Frank Decentralization
CME Group said it plans to file a lawsuit against the Commodity Futures Trading Commission (CFTC) over the agency’s approval of crypto futures, setting up a direct legal conflict between the largest futures trading operator and its regulator.
Outgoing CME CEO Terrence Duffy made the announcement on CNBC’s “Fast Money,” saying the company would file a lawsuit today. CME later confirmed the plans to Reuters. The lawsuit targets the CFTC’s decision in late May to allow the prediction market platform Kalshi to offer bitcoin futures — a first in the United States.
At the center of the legal debate is the dispute over classification under the Dodd-Frank Act. Duffy argues that perpetual futures, known as “perps,” aren’t futures at all but exchanges, so they’re subject to a different set of clearing, reporting, and trading venue requirements.
“Under the Dodd-Frank Act, it defines what a swap is and what a future is, and if there are two parties exchanging payments, that’s considered a swap,” Duffy told CNBC.
A perpetual futures is a derivative contract that has no expiration date. Rather than settling on a fixed date, they rely on periodic subsidy payments exchanged between traders. Products can carry power of up to 50 to 1, increasing both gains and losses. For a long time in overseas crypto trading, they have never been offered in domestic, regulated areas in the United States.
Kalshi and Coinbase receive CFTC approval
The CFTC changed that in late May when it approved the Kalshi bitcoin perp contract. The agency then moved Coinbase to connect US customers to permanent offshore exchanges. CFTC chairman Michael Selig defended both rulings as a way to bring a large portion of crypto derivatives activity under domestic law.
“It’s time to approve regulated futures contracts that don’t have an expiration date,” Selig told CNBC’s “Fast Money” earlier this week. “We’re going to make sure that the product is available, but it’s well regulated here in the US”
The CFTC pushed back against CME’s legal threat. A spokesman told Reuters the agency looked forward to addressing the allegations and called the lawsuit “frivolous.”
Duffy said he spent eight months preparing for the challenge with CME’s board and made it clear that the company views the approval process itself as flawed, saying the CFTC removed the novel tool faster than normal review processes would allow.
He also outlined CME’s exclusive licenses to key market benchmarks, saying competitive perpetual contracts will need to go through CME regardless of product classification.
“We have an exclusive license with all the benchmark providers,” said Duffy. “All of this will have to go through the CME regardless of what’s going on.”
The announcement came the same day CME named Duffy’s replacement. She will step down in March 2027, handing over to President and CFO Lynne Fitzpatrick, who will be CME’s first female CEO.
The CME case came on a day that proved difficult for the CFTC on the other hand. A federal judge in the Western District of Michigan, Paul L. Maloney, denied Polymarket’s request for a preliminary injunction against Michigan regulators and ruled that bets on sports-related speculation markets are not swaps and therefore fall outside the CFTC’s jurisdiction.
Maloney wrote that the agency’s definition of its derivatives mandate was “so broad that it would encompass many activities not previously understood to be related to the financial industry.”
