The Commodity Futures Trading Commission (CFTC) is urging a federal judge to dismiss a lawsuit filed by the Chicago Mercantile Exchange (CME) that challenges the agency’s regulatory stance on crypto perpetual futures. The CFTC argues that CME has failed to demonstrate financial harm or increased competition resulting from the agency’s decision.
The core of CME’s challenge lies in the CFTC’s classification of Kalshi’s Bitcoin perpetual contract as a future. CME contends that contracts without a defined expiration or delivery date should be classified as swaps under the Commodity Exchange Act and that the CFTC’s approval process was improper. However, the CFTC asserts that CME has not shown it has suffered financial injury or is likely to imminently face such harm.
In its filing on Wednesday, attorneys for the CFTC, including those for Chairman Michael S. Selig, characterized CME’s lawsuit as “much ado about nothing.” The regulator argued that CME has not alleged it is prevented from listing similar futures contracts itself, nor that the Commission lacks the authority to approve such listings. The CFTC further noted that public comments from CME executives suggest customers have not requested perpetual futures and that these contracts are not substitutes for CME’s existing hedging products.
To counter CME’s claims of competitive injury, the CFTC presented trading volume data, indicating that August trading volume for certain futures surpassed May volume. The regulator stated that a ruling in favor of CME would not address the alleged harm.
Perpetual futures, or perps, enable traders to maintain leveraged long or short positions indefinitely. Funding payments between traders help align contract prices with the underlying spot market. Kalshi and Polymarket had signaled plans to expand into perpetual futures in April. The CFTC’s May order allows registered designated contract markets to list similarly structured perpetual futures based on Bitcoin and other digital commodities.
CME announced its planned legal challenge on June 18. Since then, Kalshi has filed to certify contracts tied to 12 altcoins and, in August, sought to list a perpetual future tracking copper prices. The CFTC’s May order provides a regulatory path for these types of contracts.
It remains uncertain whether the court will accept the CFTC’s interpretation of trading volume data or its conclusion regarding CME’s alleged financial injury. The court has not yet ruled on the CFTC’s motion to dismiss the lawsuit.
Why This Matters
The materials describe a narrow update: The CFTC has requested a federal judge dismiss a lawsuit filed by CME. The court has not assessed the CFTC’s conclusion regarding trading volume data.
Broader Context
Source materials place the factual news in this context: Perpetual futures, or perps, let traders maintain leveraged long or short positions indefinitely.
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