Crypto Derivatives in Focus: The Perpetual Swaps Question Behind CME’s Case

CME Group has filed a lawsuit against the CFTC, alleging the regulator mishandled its approval of Kalshi’s first U.S.-listed perpetual futures product. The exchange is seeking to have both the approval and the associated self-certified contracts set aside.

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Futures or Swaps?

The Narrative

CME argues the CFTC failed to properly assess Kalshi’s application before approving its perpetual futures contracts. The legal challenge follows comments from CEO Terry Duffy, who indicated just a day earlier that the firm would contest the late-May approval.

Why It Matters

It is highly unusual for a major derivatives exchange to sue its primary regulator. Perpetual futures, or “perps,” remain an emerging product, closely tied to crypto markets. CME contends the CFTC’s process fell short of Dodd-Frank requirements and could undermine its existing derivatives business.

Breaking It Down

The dispute hinges on classification. CME maintains that perpetual contracts pose a competitive threat to its long-dated futures and have been miscategorized. According to the lawsuit, these instruments should be treated as “swaps” under Dodd-Frank, not “futures.”

That distinction is critical, as each classification carries different regulatory obligations. Duffy recently emphasized that how these products are defined determines the rules governing market participants.

CME further claims the CFTC did not conduct a rigorous legal analysis when approving Kalshi’s Bitcoin perpetual contract. The filing notes the regulator failed to reference Dodd-Frank’s definition of a “swap,” raising questions about the depth of its review.

Instead, CME argues, the agency effectively approved the application without sufficient scrutiny.

At the same time, the market for perpetual products is expanding rapidly. On the day Kalshi received approval, the CFTC also issued a no-action letter to Coinbase, potentially opening the door for similar offerings—likely through offshore structures.

Perpetual futures are not explicitly addressed in Dodd-Frank, adding complexity to the debate. Katherine Kirkpatrick Bos, former general counsel at StarkWare, noted that while “swap” is clearly defined in the law, “future” is not, giving the CFTC flexibility in classifying new instruments. CME, however, argues that the absence of an expiry date should exclude perps from being categorized as futures.

Bos has also pointed out that there is no clear precedent requiring “future delivery” as a defining feature of futures contracts.

This Week

Tuesday
14:00 UTC (10:00 a.m. ET): The Senate Banking Committee will hold a hearing on “The Affordability Agenda,” featuring leaders from the Consumer Bankers Association, National Association of Realtors and the Digital Chamber.

Wednesday
14:00 UTC (10:00 a.m. ET): The House Financial Services Committee will host a hearing on “Future of Payments,” with speakers yet to be announced.

Thursday
14:00 UTC (10:00 a.m. ET): The House Financial Services Committee will hold a hearing on “The Future of How America Invests.”
18:00 UTC (2:00 p.m. ET): A House Oversight subcommittee will convene a hearing on digital currencies.

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