- CME CEO Terrence Duffy argues crypto perpetual futures should be regulated as swaps rather than futures contracts.
- The dispute follows CFTC approvals that enabled platforms like Kalshi and Coinbase to offer regulated crypto perps.
- The lawsuit could shape how U.S. regulators classify and oversee crypto derivatives markets in the future.
CME Group CEO Terrence Duffy announced plans to sue the Commodity Futures Trading Commission over its approval of crypto perpetual futures. Duffy revealed the decision on CNBC, arguing the products should fall under swap regulations. The challenge follows the CFTC’s approval of perpetual futures offerings tied to platforms including Kalshi and Coinbase.
Duffy Challenges Perpetual Futures Classification
At the center of the dispute is the legal status of perpetual futures, often called perps. These contracts allow traders to speculate on prices without owning assets and carry no expiration date.
According to Duffy, perpetual futures meet the definition of swaps under the Dodd-Frank Act. He argued that when two parties exchange payments, the arrangement qualifies as a swap rather than a futures contract.
Duffy also stated that CME holds exclusive licensing agreements with benchmark providers. As a result, he said products tied to those benchmarks should pass through CME regardless of structure.
Notably, Duffy said CME and its board have worked on the legal challenge for eight months. He rejected claims that the lawsuit emerged from recent competitive developments.
CFTC Defends Approval Process
The conflict follows the CFTC’s approval of Kalshi’s BTCPERP contract in late May. The decision allowed the platform to launch a regulated Bitcoin perpetual futures product in the United States.
Soon after, Kalshi expanded its perpetual offerings to additional cryptocurrencies. Coinbase also gained a regulated path for certain crypto perpetual products available to U.S. traders.
However, Duffy criticized the regulator’s approach and argued that the approval relied on legal precedents established before Dodd-Frank. He said the current regulatory framework requires a different interpretation.
Meanwhile, CFTC Chair Michael Selig defended the agency’s position earlier this week. Speaking on CNBC, Selig said regulated perpetual futures should be available in U.S. markets while remaining under domestic oversight.
Legal Fight Expands Across Crypto Markets
The lawsuit adds another layer to growing competition within crypto derivatives markets. CME previously described crypto perpetual futures as carrying risks tied to leverage, funding costs, and automatic liquidations.
Reuters reported that a CFTC spokesperson called the planned lawsuit frivolous and said the agency looks forward to addressing the claims.
For now, the legal battle places CME and the CFTC on opposing sides of a debate over whether crypto perpetual futures belong under futures regulations or swap rules. The case will focus on how U.S. law classifies the fast growing derivatives product.
