The debate over the classification of crypto perpetual futures escalates as the CFTC questions the legal status of the Chicago Mercantile Exchange (CME).

The US Commodity Futures Trading Commission has requested the federal court to dismiss the case filed by CME Group Chicago Mercantile Exchange (CME), which questioned the regulator's approach of treating crypto perpetual contracts as futures. In its motion submitted on September 2, the agency argued that CME, the world’s largest derivatives market, lacked legal standing to sue, thereby undermining the basis of CME’s complaint.

The dispute originated when the US Commodity Futures Trading Commission (CFTC) approved Kalshi’s Bitcoin perpetual contract in late May, allowing it to be traded under a futures framework on the regulated KalshiEX platform. In mid-June, CME filed suit, asserting that perpetual contracts—a type of derivative with no fixed expiry date, which tracks the price of the underlying asset via regular funding payments—should be regulated as swap contracts, not futures. The exchange claimed that the CFTC’s approval gave the new trading venue an unfair competitive advantage, resulting in an imbalance in the regulatory landscape.

The US Commodity Futures Trading Commission (CFTC) countered that CME itself is a designated contract market and, under the same regulatory policy it is challenging, could seek approval to list similar perpetual contract products. The agency argued that any resulting competitive disadvantage is self-inflicted, noting that the plaintiff cannot establish legal standing by voluntarily foregoing opportunities available to competitors. The regulator also cited CME’s own trading data, pointing out that Bitcoin and Ethereum futures volumes in June and August exceeded May’s levels, indicating no substantive competitive harm.

Dispute Over Remedies and Classification

Beyond legal standing, the US Commodity Futures Trading Commission (CFTC) questioned whether, even if the court ruled favorably for CME, it could truly remedy the alleged harm. Even if the court reclassified perpetual contracts as swap contracts, CFTC noted other venues could still offer economically similar products to traders. CFTC further argued that CME’s competitive interests are not within the scope protected by the provisions of the Commodity Exchange Act invoked in the suit.

The motion sets the stage for a broader legal review of how perpetual contracts should be classified under US law. CME insists that, because there is no predetermined expiry date, these instruments should fall entirely within the category of swap contracts as defined by entities established under the Dodd-Frank Act.  

The US Commodity Futures Trading Commission (CFTC) disagrees, claiming federal law does not require futures contracts to have a pre-set settlement date—CFTC Chair Michael Selig has previously articulated this view, emphasizing that regulated perpetual contracts must still adhere to domestic requirements for margin, leverage, and customer protection. Kalshi has defended its product and described the lawsuit as an attempt to stifle competition, while CME CEO Terry Duffy has warned that perpetual products may encourage excessive speculation.

CME must submit its opposition to the motion to dismiss by October 2. The court may dismiss the case on procedural grounds without resolving the fundamental classification issue, which would leave CFTC’s current policy and Kalshi’s approval unchanged.  

If the court determines the plaintiff has legal standing, the case will continue to examine whether the agency incorrectly interpreted the Commodity Exchange Act by treating perpetual contracts as futures—a decision that could impact future exchange applications for crypto and commodity-linked perpetual contract products, including other products reportedly under development by Kalshi.