CME to sue CFTC over Kalshi Bitcoin perpetual futures

CME Group announced it will sue the Commodity Futures Trading Commission over the agency’s approval of Kalshi’s Bitcoin perpetual futures, arguing the contracts meet the legal definition of swaps under the Dodd-Frank Act and should not be offered on a public futures exchange.

CME Chief Executive Terrence Duffy said the firm and its board spent eight months preparing the case and plan to file the lawsuit on June 18. Duffy, who intends to step down in March 2027, argued the CFTC approved the wrong product type for the wrong venue when it cleared Kalshi to list the contracts in late May.

Perpetual futures, commonly called perps, are contracts without an expiration date that let traders hold positions indefinitely without owning the underlying asset. CME’s legal theory is that perps meet Dodd-Frank’s definition of swaps. Swaps are typically bilateral agreements traded directly between parties and are subject to different trading, clearing and reporting requirements than exchange-traded futures.

CME says those differences matter for market infrastructure. The company holds exclusive benchmark licenses for major price indices used by crypto derivatives, and it argues that contracts referencing those benchmarks would have to route through swap-specific clearing and trading systems if courts find perps are swaps. “We have an exclusive license with every single provider of the benchmarks,” Duffy said. “They would have to list them as swaps, if that’s the way it came out.”

The CFTC approved Kalshi’s Bitcoin perpetual futures and similar listings at other U.S. platforms, creating a domestic market for perps that had been available mainly on offshore venues. Kalshi’s Bitcoin perp exceeded $1 billion in trading volume within days of its May launch.

CFTC Chair Michael Selig defended the agency’s approvals, commenting, “It’s time to approve regulated futures contracts that have no expiration date.” The agency has maintained that bringing perpetual futures onto regulated U.S. venues places them under U.S. supervision and reduces reliance on offshore trading venues.

If the court accepts CME’s argument, two main outcomes are possible: judges could block the product class from trading on regulated futures exchanges, or they could reclassify perps as swaps and require those contracts to clear and trade through swap-specific infrastructure, including the benchmark and clearing systems CME controls. Either result would affect contracts already listed and the platforms that added the product.

Dodd-Frank separates regulatory frameworks for futures and swaps, assigning different obligations to exchanges, clearinghouses and market participants. The legal classification determines where products can be listed, how they must be cleared and which entities can provide price benchmarks and related infrastructure.

CME’s planned lawsuit sets up a legal test over the classification of a rapidly growing crypto derivatives product. The company will file its complaint on June 18 and the courts will decide how perpetual futures should be regulated in the United States.