On June 18, the Chicago Mercantile Exchange Inc. (CME) lodged a legal challenge in the United States District Court for the District of Columbia against the Commodity Futures Trading Commission (CFTC). This lawsuit contests the CFTC’s decision on May 29, 2026, to approve the bitcoin perpetual futures contract (BTCPERP) from KalshiEX LLC (Kalshi) and the associated Policy Statement regarding the introduction of perpetual contracts.
Background—CFTC’s Green Light for Perpetual Futures
On May 29, the CFTC initiated several key actions to create a regulatory structure for perpetual contracts related to digital commodities. As detailed in our earlier client alert, FCTM Breaking News: CFTC Approves U.S. Bitcoin Perpetual Futures Contract and Issues Related Guidance, the CFTC (1) approved the BTCPERP futures contract from Kalshi, (2) released a policy statement inviting other exchanges to submit perpetuals for consideration, (3) issued guidance on 24/7 trading and clearing methods, and (4) provided an interpretive letter and no-action stance for Coinbase Financial Markets, Inc. regarding futures-listed perpetuals on its foreign affiliate, Deribit.
CME’s History with the CFTC
This lawsuit is not the first instance of CME resisting CFTC actions. Back in November 2012, CME sued the CFTC to prevent a rule that mandated reporting of private swap data to third-party repositories, asserting that such a requirement exceeded the CFTC’s regulatory power and that CME could manage the data collection efficiently. The CFTC relinquished its position within a month, prompting CME to withdraw its legal challenge. Recently, a spokesperson for the CFTC described this new lawsuit as “lawfare,” suggesting that established entities are wary of future competition on equal terms.
The Core Legal and Regulatory Conflict
The primary issue in the CME’s legal filing revolves around the classification of perpetual contracts—should they be categorized as “swaps” or as “contracts for the future delivery of commodities” (commonly known as futures) under the Commodity Exchange Act (CEA), as modified by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?
The CME claims that perpetual contracts clearly align with the CEA’s definition of a swap in 7 U.S.C. § 1a(47)(A)(iii). This is because they (1) facilitate payments based on commodity values (via funding rate payments), (2) transfer the financial risk associated with future shifts in commodity values between parties, and (3) do this without transferring ownership rights of the underlying asset.
The CME further argues that perpetual contracts do not meet the criteria for futures, primarily due to the absence of a fixed expiration date when settlement occurs—whether through physical delivery or cash. The CME insists that perpetual contracts lack expiration, delivery obligations, and set settlement dates, which Congress intended as distinguishing features between swaps and futures.
Additionally, CME points out that the CFTC has previously classified perpetual contracts as swaps in five enforcement actions against platforms such as KuCoin (2024), Binance (2023), and others. This classification has significant implications for regulations and taxation. Swaps must adhere to dealer registration norms, face more rigorous margin requirements, and follow extensive data reporting rules, while futures benefit from favorable tax treatment under Section 1256.
Claims Presented
The CME has presented two main claims in its filing.
Firstly, the CME asserts that the CFTC’s actions were illegitimate as they contravened Section 5c(c)(5)(B) of the CEA, which states that the Commission must approve a new contract unless it determines the contract would violate the Act. The CME contends that considering a futures contract as a swap violates the CEA due to the established legal precedent requiring a definitive settlement date—a feature absent from BTCPERP and perpetual contracts in general. The CME also challenges the legality of the Policy Statement, arguing that it allows other designated contract markets (DCMs) to self-certify cryptocurrency perpetuals as futures, thus breaching the CEA.
Secondly, the CME contends that the CFTC’s decisions were arbitrary and lacking in sound reasoning because the agency (1) did not assess the correct statutory language—specifically, the third prong of the swap definition (7 U.S.C. § 1a(47)(A)(iii)); (2) effectively rubber-stamped Kalshi’s application without conducting its own rigorous analysis; (3) failed to explain deviations from earlier enforcement actions where perpetuals were classified as swaps; (4) did not contemplate critical factors, such as the significant policy implications of self-certifying an entire class of perpetual contracts; and (5) relied solely on outdated case law regarding futures contracts while neglecting the Dodd-Frank amendment that clarified the definition of swaps.
Relief Requested
The CME seeks a court order to nullify the CFTC’s approval of Kalshi’s BTCPERP futures contract and the accompanying Policy Statement.
Furthermore, the CME requests declarations affirming that Kalshi’s bitcoin perpetual and similar digital commodity contracts are classified as swaps under the CEA and that it is unlawful for the CFTC to permit their listing as futures, along with a claim that the CFTC acted unlawfully by not halting the listing of perpetual contracts submitted through self-certification under 17 C.F.R. § 40.2.
Key Insights
This lawsuit underscores ongoing competitive and regulatory challenges surrounding certain cryptocurrency products. The introduction of perpetual contracts could pose a competitive risk to CME. Although DCMs like Kalshi and CME are able to list both futures and swaps, CME may be targeting a stance that forces competitors to classify perpetuals as swaps, believing such a classification might limit their success and competitiveness.
This case raises crucial statutory interpretation questions regarding whether perpetual contracts should be seen as swaps or futures under the CEA, having significant repercussions on regulation, taxation, and trading of these products in the U.S. In light of the joint request for comments from the CFTC and the Securities and Exchange Commission, which coincided with the CME’s legal filing, it’s clear that discussions around product classification and regulatory clarity will be an ongoing concern.
1 Chicago Mercantile Exchange Inc. v. Michael S. Selig and Commodity Futures Trading Commission, Case 1:26-cv-02157 (D.D.C. 2026), available at this link.
2 See, for instance, CME sues US CFTC concerning Kalshi and Coinbase offering perpetual futures | Reuters. The CME, the largest futures exchange in the U.S., has roots tracing back to 1898.
3 See, for example, CFTC sparks potential upheaval on Wall Street, driving exchange stocks down (“the regulatory approval of perpetual futures for bitcoin has raised alarms that new trading products may threaten Wall Street’s stability”); see also Complaint at paragraphs 29 and 43.
4 See Joint Request for Comment regarding Further Definition of “Swap” and “Security-Based Swap” and Alternative Compliance, available at this link.