The Commodity Futures Trading Commission has asked a federal judge to dismiss the CME Group lawsuit over crypto perpetual futures, arguing the derivatives giant cannot show it suffered any concrete financial harm from the contracts it opposes. The filing, made at the start of September, calls the dispute much ado about nothing and sets up a court fight with implications for how US investors trade crypto derivatives.
CME sued the regulator and its chairman, Michael Selig, in June after the CFTC approved a bitcoin perpetual futures contract for the prediction market platform Kalshi. The exchange argues the contracts are legally swaps under the 2010 Dodd-Frank reforms, a classification the CFTC itself used in earlier enforcement cases, and that the regulator acted arbitrarily when it approved them as futures.
Why the classification matters
Perpetual futures are derivatives that track the price of an underlying asset, carry high leverage and never expire. Traders hold positions indefinitely, and periodic funding payments between the long and short sides keep the contract price close to spot. The structure dominates global crypto trading: volume grew 29 percent last year to $61.7 trillion, according to the market data provider CryptoQuant, as traders sought new ways to profit from cryptocurrency volatility.
The legal label determines who can list the product and under what rules. If perpetuals are futures, any designated contract market can list them. If they are swaps, the pathway is narrower. CME wants the court to void the May 29 order that approved the Kalshi bitcoin perpetual and a policy statement allowing similar listings across futures exchanges.
The May 29 order covers similarly structured perpetual contracts tied to other digital commodities with deep, active and continuous spot markets. Perpetuals linked to other asset classes remain subject to case-by-case review under an accompanying policy statement, which is why the equity perpetual filings now in motion still face separate hurdles.
The regulator case against the case
In its motion to dismiss, the CFTC argued CME lacks constitutional standing because it has not alleged a concrete financial loss. The agency also noted that its order lets any registered designated contract market, including CME itself, list similarly structured products. Nothing stops CME from competing directly.
The filing went further, pointing out that CME has publicly said its customers have not asked for perpetual futures. Any harm caused by its decision not to offer the contracts is therefore self-inflicted, the regulator argued. Even a ruling in CME favor would not remove the competing products, since Kalshi and other markets could continue offering them as swaps, meaning reclassification would not remedy the alleged competitive injury.
The CFTC also said CME effort to protect itself from competition falls outside the interests the Commodity Exchange Act was designed to protect, a framing that treats the suit as a commercial grievance rather than a legal defect in the approval process.
A CFTC spokesperson was blunt when the suit was filed. Rather than compete in the marketplace, the CME has decided to undertake lawfare against the agency and the administration pro-innovation agenda, the spokesperson said, adding that incumbents fear having to compete on a level playing field. Kalshi spokesperson Elisabeth Diana said the dispute was about the fear of competition, not the law. Coinbase chief policy officer Faryar Shirzad, whose company benefits from the policy, said competition and innovation are the bedrock of vibrant financial markets.
Coinbase is waiting in the wings
The fight is not only about Kalshi. Coinbase filed registration documents with the Securities and Exchange Commission in early September seeking approval to list equity perpetuals with 24/7 trading for US investors, with CFTC sign-off to follow. Shirzad said equity perps have proven demand internationally and welcomed the prospect of a regulated domestic pathway.
Coinbase already launched perpetual futures for non-US customers in March, covering stocks including Apple, Microsoft, Nvidia and Amazon. Kalshi separately filed for CFTC approval to launch equity index perpetuals, putting both platforms in more direct competition with incumbent exchanges. A favorable ruling for the CFTC would clear more room for that expansion. A win for CME could slow the whole category.
What happens next
The motion to dismiss puts the case on a procedural track that could take months before any merits ruling. If the judge finds CME lacks standing, the challenge ends without the court ever reaching the futures-versus-swaps question. If the case proceeds, the court would have to weigh whether the CFTC reversal from its earlier swap classifications was adequately explained, which is the core of the arbitrary and capricious claim.
Shares of CME and Intercontinental Exchange, the parent of the New York Stock Exchange, fell after the May approval, reflecting investor concern about the competitive threat to existing exchanges. That market reaction is part of the standing dispute: the CFTC argues stock movement is not the concrete injury the law requires, while CME argues competitive injury is exactly what the case is about.
The outcome shapes more than one product. Exchanges, prediction markets and crypto platforms have all been building toward US-listed perpetuals since the May approval, and the CME case is the first real test of whether that opening holds. A ruling on the motion to dismiss is expected in the coming months, and whichever way it goes, the loser has every incentive to appeal, which could stretch the uncertainty into next year. In the meantime, trading desks on both sides of the argument are preparing listings either way, since the infrastructure for perpetual contracts is already built and waiting for a clear legal answer.