CME CEO Terrence Duffy plans to sue the CFTC over crypto perpetual futures approval, arguing the products are swaps under Dodd-Frank. Kalshi's BTCPERP has already generated $5.5 billion in volume.
CME Group CEO Terrence Duffy said the exchange plans to sue the Commodity Futures Trading Commission over the agency's approval of crypto perpetual futures, arguing the products are swaps under the Dodd-Frank Act and should not trade as futures contracts.
Duffy laid out the legal challenge during a Wednesday appearance on CNBC. The fight centers on the CFTC's May 29 approval of Kalshi's BTCPERP product, which the agency designated as a futures contract within a regulated contract market. Coinbase also obtained regulatory authorization for perpetual offerings through its acquisition of Deribit, an established derivatives platform.
"Under the Dodd-Frank Act, it clearly defines what a swap is and what a future is," Duffy said on CNBC. He argued that perpetual futures involve reciprocal payment exchanges between parties, which he said satisfies the statutory definition of a swap. Products authorized by the CFTC fail to meet the legal criteria for futures contracts, he added.
CME holds exclusive licensing agreements with benchmark data providers. Duffy said products using those benchmarks should route through CME's platform regardless of their perpetual format.
Kalshi's perpetual futures product generated over $5.5 billion in trading volume since its debut, signaling strong market demand.
Duffy said CME's board has been developing the legal strategy for several months. "I've never shied away from one, and I won't shy away from this," he said.
He also criticized the CFTC for what he called factual misrepresentation, pointing to agency communications about 24/7 trading capabilities. Duffy claimed the CFTC portrayed it as a formal rule when it lacked that status.
The CFTC responded through a spokesperson, calling the anticipated lawsuit "frivolous" and saying the agency welcomes the chance to contest the allegations in court.
Stock prices for CME, Cboe, and Intercontinental Exchange fell after the CFTC's regulatory decision on perpetual futures. Traders are assessing whether crypto perpetual products could pull volume from traditional futures platforms.
Duffy, who plans to step down as CEO next year, has previously called U.S. crypto perpetual futures a "disaster waiting to happen." His concerns include leverage levels, automated liquidation mechanisms, and funding rate costs.
CME said it needs regulatory clarity before potentially launching its own perpetual futures offerings. Duffy said current guidelines lack sufficient clarity.
The legal fight could reshape how U.S. exchanges structure crypto derivative listings and determine the competitive landscape for new entrants challenging established venues.
CME Group carries an Alpha Score of 52, labeled Mixed in the Financials sector. Coinbase Global scores 26, labeled Weak. Intercontinental Exchange scores 34, also Weak.
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