TL;DR
- The CFTC asked a federal judge to dismiss CME Group’s lawsuit, arguing the exchange cannot prove concrete economic harm.
- The regulator described the litigation as “much ado about nothing” and noted that any competitive damage would be self-inflicted by CME, which acknowledged its clients never requested perpetual futures.
- Judge Colleen Kollar-Kotelly rejected the request to withhold the administrative record and ordered the parties to propose a joint schedule before September 4.
The CFTC formally requested a federal judge to dismiss the lawsuit filed by CME Group against its approval of cryptocurrency perpetual futures, arguing that the exchange failed to demonstrate concrete economic harm.
The regulator filed the motion on Wednesday and described the litigation as “much ado about nothing“, arguing that CME lacks constitutional standing as it has not alleged a verifiable financial loss.
The agency noted that the order challenged by CME allows any registered designated contract market, including CME itself, to list products with a similar structure. Along those lines, the CFTC indicated that the harm CME attributes to competition would, in any case, be self-inflicted: the exchange itself publicly acknowledged that its clients have not requested perpetual futures.
The Origins of the Conflict Between CME and the CFTC
CME filed the lawsuit in June, following the CFTC’s approval of Kalshi‘s BTCPERP contract as a future rather than classifying it as a swap. The cash-settled product tracks the spot price of bitcoin, operates around the clock with no expiration date, and uses a funding rate to keep its price aligned with the spot market. The May 29 order also covers perpetual contracts linked to other digital commodities with active and deep spot markets.
CME argues that contracts with no expiration or delivery obligation, which also exchange funding payments between traders, meet the legal definition of swaps, not futures. It also accused the regulator of failing to explain its departure from prior enforcement cases in which it classified crypto perpetuals as swaps.
Arguments Against Reclassification
The CFTC further argued that a ruling in CME’s favor would not remove competing products from the market. Kalshi and other designated markets could continue offering them as swaps, which would render any reclassification ineffective as a remedy to the alleged competitive harm. The regulator added that CME’s attempt to shield itself from competition falls outside the scope of the interests the Commodity Exchange Act was designed to protect.
United States District Judge Colleen Kollar-Kotelly rejected last week the CFTC‘s request to withhold the administrative record until the dismissal motion was resolved, noting that the material could contain evidence of the competitive harm alleged by CME. She ordered the parties to propose a joint briefing schedule before September 4.
