The Commodity Futures Trading Commission has asked a federal court to throw out CME Group’s challenge to the agency’s approval of Kalshi’s bitcoin perpetual futures contract, arguing that the Chicago-based derivatives exchange has failed to show that it suffered any concrete competitive harm.
In a filing submitted Wednesday to the U.S. District Court for the District of Columbia, the CFTC said CME lacks legal standing to contest the agency’s May 29 order. The regulator maintained that CME can list a comparable perpetual futures product itself and that the company’s own public statements indicate its customers have not been seeking such contracts.
The dispute places a fast-growing type of crypto derivative at the center of a legal argument over U.S. market structure. Perpetual futures, commonly called perps, are leveraged contracts designed to track an underlying asset without a fixed expiry date. They have long been popular on offshore crypto platforms, but their treatment under U.S. commodities law remains contested.
CME sued the CFTC on June 18, alleging that the agency used the wrong legal classification when it approved Kalshi’s proposed bitcoin perpetual futures contract. CME argued that perpetual products should be regulated as swaps under the Commodity Exchange Act and the Dodd-Frank Act rather than as futures.
CFTC says CME can offer a competing contract
The CFTC’s dismissal motion attacks both the procedural and substantive foundations of CME’s lawsuit. To establish standing in federal court, CME must show that the agency’s action caused a real and identifiable injury, rather than a possible future competitive disadvantage.
According to the CFTC, CME’s complaint does not meet that test. The agency said CME, as a designated contract market, has the ability to self-certify and list a similar perpetual futures contract. Designated contract markets are CFTC-regulated venues authorized to list futures and options products under the Commodity Exchange Act.
That argument shifts the case away from the novelty of Kalshi’s product and toward CME’s own commercial choices. The CFTC said CME has publicly indicated that its customers are not requesting perpetual futures, weakening the exchange’s claim that Kalshi’s offering has diverted demand or imposed a competitive cost.
The agency also cited CME’s monthly trading figures for crypto-linked futures. Bitcoin- and ether-related futures volume on CME was higher in both June and August than in May, when the CFTC issued the contested order, according to the regulator’s filing. The CFTC used those figures to argue that CME had not identified a measurable loss associated with the approval.
Higher aggregate volume alone may not settle every question around competitive injury, since trading activity can rise even as a venue loses potential business in a particular product category. Yet it gives the CFTC a direct response to CME’s contention that the order damaged its position in crypto derivatives. CME will need to explain why its reported growth does not undermine its claim of harm.
The classification issue reaches beyond Kalshi
CME’s lawsuit focuses on whether perpetual futures fit within the legal definition of a futures contract or should instead be treated as swaps. The distinction can affect the rulebook that applies to a product, including trading, clearing, reporting and participant requirements.
CME’s position is that the defining characteristics of a perpetual contract place it in the swaps framework established by Dodd-Frank. Perpetual products generally avoid the scheduled expiration and settlement process associated with conventional futures. Many also use periodic funding payments between long and short positions to keep contract prices close to the underlying asset’s market price.
The CFTC countered that even if CME prevailed on the classification question, the requested outcome would not cure the injury CME claims to have suffered. The regulator said Kalshi and other designated contract markets could continue to offer perpetual contracts under a swaps classification.
The agency further argued that the regulatory and tax differences identified by CME were insufficient to establish a legally actionable competitive injury. In effect, the CFTC is telling the court that changing the label on the product would not prevent competitors from listing it.
That line of argument could be central to the case. A court considering dismissal does not need to settle every technical question about perpetual contracts if it concludes CME cannot show that a favorable ruling would remedy its alleged damage.
A test for onshore perpetual products
The case comes as U.S.-regulated platforms explore ways to bring perpetual-style crypto trading into markets supervised by the CFTC. Offshore venues have historically dominated activity in these products, offering round-the-clock trading and, in many cases, substantial leverage. U.S. regulated versions would operate within a more formal market framework, with venue-specific rules on margin, surveillance and participant access.
Kalshi’s approved contract therefore has implications beyond a single bitcoin product. It tests whether designated contract markets can introduce perpetual structures through the futures framework and whether incumbent exchanges can use the courts to challenge that route.
CME’s complaint also reflects the commercial pressure surrounding the product category. CME is an established venue for regulated crypto futures, while perpetual contracts could appeal to participants accustomed to instruments that remain open indefinitely rather than expiring on a calendar cycle. The CFTC’s motion argues that this commercial opportunity is available to CME as well, provided it chooses to pursue it.
The agency requested an oral hearing on its motion to dismiss. CME’s response is due Oct. 2, after which the court will decide whether the lawsuit can proceed or should be dismissed before the classification question receives a fuller judicial review.
To understand these products better, explore what are perpetuals and how do they work in crypto markets.
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