CFTC Seeks Dismissal of CME’s Bitcoin Perpetual Futures Challenge

The Commodity Futures Trading Commission (CFTC) is seeking dismissal of CME’s challenge to Bitcoin perpetual futures. A dismissal on standing grounds would leave Kalshi’s approval intact without deciding CME’s argument that the contract should be classified as a swap.

CFTC Challenges CME’s Claimed Competitive Injury

The agency’s Oct. 16 filing argues that CME has not demonstrated financial harm from Kalshi’s Bitcoin perpetual futures approval. It says increased competition alone does not establish the exchange’s right to sue.

The CFTC also points to CME’s statements to investors about limited customer demand for perpetual contracts. It argues those comments undermine the exchange’s claim that the products threaten its business.

CME Seeks to Overturn Kalshi’s Approval

Chicago Mercantile Exchange Inc., a CME Group subsidiary, filed its lawsuit in federal court in Washington on June 18. It challenges the CFTC’s May 29 approval of KalshiEX’s Bitcoin perpetual futures contract and an accompanying policy statement.

CME contends the contracts should be classified as swaps under the Commodity Exchange Act. It argues that treating them as futures lets competing exchanges avoid requirements that would apply under a swaps classification.

The complaint also alleges the agency changed its regulatory approach without following required procedures. CME asks the court to set aside the approval and policy statement.

CFTC Explains Its Treatment of Bitcoin Perpetuals

Kalshi’s contract has no fixed expiration date and settles in cash. Periodic payments between traders holding long and short positions are designed to keep its price close to Bitcoin’s spot price.

The CFTC’s approval found that listing the product as a futures contract would not violate federal commodities law. The order limited its analysis to that contract and similarly structured digital-commodity products with deep, active and continuous spot trading.