Key facts
- CME Group has sued the U.S. Commodity Futures Trading Commission (CFTC) and its chairman, Michael Selig.
- The lawsuit challenges the CFTC's approval of perpetual futures contracts for Kalshi and Coinbase.
- CME Group argues that perpetual futures should be classified as swaps under the Dodd-Frank Act, not futures.
- The CFTC approved Kalshi's bitcoin perpetual future and stated it would not object to Coinbase offering offshore perpetual futures to U.S. investors.
- CME Group alleges the CFTC's decision constitutes 'textbook competitive injury' and acted arbitrarily and capriciously.
CME Group, the world's largest derivatives marketplace, has sued the U.S. Commodity Futures Trading Commission (CFTC) and its chairman, Michael Selig, challenging the regulator's recent approval of perpetual futures contracts. CME argues that these contracts, which lack expiration dates and allow high leverage, should be classified as swaps under the Dodd-Frank Act, a stance it claims the CFTC previously accepted.
The lawsuit, filed in a Washington D.C. federal court, seeks to void the CFTC's May 29 approval for the prediction markets platform Kalshi to list a bitcoin perpetual future, as well as a policy statement allowing similar contracts on exchanges like Coinbase. CME contends that the CFTC's decision constitutes 'textbook competitive injury' by allowing new competitors into its retail futures market.
A CFTC spokesperson called the lawsuit 'frivolous' and accused CME of 'lawfare' against the agency and the Trump Administration's 'pro-innovation agenda,' suggesting incumbents fear competition. Kalshi and Coinbase, while not defendants, have welcomed the CFTC's decision, with Coinbase stating it benefits American investors. Perpetual futures trading volume grew significantly last year, with traders seeking to profit from cryptocurrency volatility.
CFTC Chairman Michael Selig has defended the approvals as promoting responsible innovation and supporting the goal of making the U.S. the 'crypto capital of the world.' Selig is the sole commissioner on the CFTC, which is also involved in lawsuits with U.S. states over prediction markets.