CME sues CFTC over perps in fight for $60 trillion market

The largest U.S. derivatives exchange is suing its own regulator over whether crypto perpetual futures are futures at all — a legal battle that could determine who controls a $60 trillion market.

The CME Group sued the CFTC and Chairman Mike Selig in June, challenging the agency's approval of Kalshi and Coinbase to list onchain perpetual futures — derivative contracts with no expiration date that the exchange argues are swaps, not futures.

"The definition of a swap is pretty clear," CME Chairman Terry Duffy said in an interview. "When two parties exchange payments to each other, that is deemed a swap."

The CFTC approved the products through a policy statement rather than formal rulemaking, with Selig acting as the agency's sole commissioner. Kalshi's debut crypto perp product reached more than $1 billion in trading volume within its first week, according to the company. The CME's lawsuit argues the agency misapplied the Commodity Exchange Act and failed to consider the competitive harm to its own long-dated futures products.

A federal court ruling is expected to determine whether perps are classified as futures or swaps — a distinction that carries vastly different tax treatment, margin requirements, and registration obligations. The decision will shape whether U.S.-regulated venues can compete with offshore platforms like Hyperliquid, which already offers perpetual contracts tied to gold, crude oil, and crypto assets 24 hours a day.

The Legal Argument

Duffy said the CFTC's approval ignored swap regulations that require five-day margin and mandatory registration for swap participants. The CME also questioned whether the agency can enforce its perps policy against non-U.S. traders accessing regulated platforms. "What are you doing to police U.S. participants from not participating in something that it's illegal for them to do?" Duffy asked.

The CFTC determined that a case-by-case review process was suitable for perps rather than a formal rulemaking that would invite public comment. Jaret Seiberg, a financial policy analyst at TD Cowen, said the CME may have the "upper hand" in the dispute because the CFTC approved perps "despite a history of arguing they are swaps and without issuing a regulation despite seeking public comment in April 2025."

The Incumbent vs. The Challengers

Jake Chervinsky, CEO of the Hyperliquid Policy Center, described the lawsuit as an incumbent using regulation to fend off competition. "It's really going to come down to this sort of policy fight between this massive incumbent and the regulator who is trying to allow challengers to that incumbent," he said.

The CME's suit came shortly after the CFTC blocked the exchange's own bid to offer 24/7 trading in crude oil futures — traditional expiring contracts, not perpetuals. The regulator said it is still reviewing a separate CME request for continuous oil futures trading filed through a different approval process.

What's Next

Both sides now await action in federal court. A ruling in favor of the CFTC would open the door for U.S.-regulated crypto perps trading, directly benefiting Coinbase, Kalshi, and DeFi platforms like Hyperliquid. A win for the CME could halt or severely restrict onshore perps, reinforcing the exchange's dominance in regulated derivatives.

The case also highlights the limits of a single-commissioner CFTC. "When you have a five-person commission, the rulemaking doesn't go as quickly, because of the counter view," said Liz Davis, partner at Davis Wright Tremaine. "So you're sort of being deprived of that counter view, other than the CME bringing suit."

This article is for informational purposes only and does not constitute investment advice.