FCTM Breaking News: CME Sues CFTC Over Approval of Bitcoin Perpetual Futures Contract

On June 18, the Chicago Mercantile Exchange Inc. (CME) filed a complaint in the United States District Court for the District of Columbia against the Commodity Futures Trading Commission (CFTC) challenging the agency’s May 29, 2026 order approving KalshiEX LLC’s (Kalshi) bitcoin perpetual futures contract (BTCPERP) and the accompanying Policy Statement Concerning the Listing of Perpetual Contracts (Policy Statement).¹

Background–CFTC’s Approval of Perpetual Futures

On May 29, the CFTC took a series of coordinated actions to establish a domestic regulatory framework for perpetual contracts (perps) on digital commodities. As explained in our prior client alert, FCTM Breaking News: CFTC Approves U.S. Bitcoin Perpetual Futures Contract and Issues Related Guidance, the CFTC (1) approved Kalshi’s BTCPERP futures contract, (2) issued a policy statement encouraging other exchanges to submit perps for review, (3) published a staff advisory on 24/7 trading and clearing operations, and (4) released an interpretive letter and no-action position for Coinbase Financial Markets, Inc. regarding perps listed as futures on its foreign affiliate, Deribit.

The CME’s History With the CFTC

Yesterday’s lawsuit is not the first time the CME has pushed back against the CFTC. In November 2012, the CME sued the CFTC to block a rule requiring it to report nonpublic swaps data to third-party swap data repositories, arguing that the mandate exceeded the CFTC’s authority and that the CME’s swap clearinghouse was well positioned to handle the function itself, as it already had collected extensive transaction data. The CFTC backed down within the month, leading the CME to withdraw its lawsuit. This time around, a CFTC spokesperson reportedly characterized the suit as “lawfare” and stated that “[i]ncumbents fear the future and having to compete on a level playing field.”²

The Core Legal and Regulatory Dispute

The central dispute in the CME’s complaint concerns whether perps should be classified as “swaps” or as “contracts of sale of a commodity for future delivery” (aka futures) under the Commodity Exchange Act (CEA), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The CME argues that perps fit squarely within the CEA’s statutory definition of a swap under 7 U.S.C. § 1a(47)(A)(iii) because they (1) provide on an executory basis for the exchange of one or more payments based on the value of a commodity (via funding rate payments), (2) transfer financial risk associated with future changes in a commodity’s value between the parties, and (3) do so without conveying a current or future ownership interest in the underlying asset.

The CME contends that perps cannot qualify as futures because they lack the defining characteristic of futures: a fixed expiration date at which settlement–via physical delivery or cash settlement–occurs. The CME emphasizes that a perp has no expiration date, no delivery obligation, and no settlement on a specific future date–features that the CME contends Congress intended in order to distinguish swaps from futures, as evidenced by the third prong of the swap definition described above.

The CME further argues that the CFTC itself, in five prior enforcement actions–against KuCoin (2024), Binance (2023), Mango Markets (2023), Deridex (2023), and BitMEX (2020)–consistently classified perps as swaps. The distinction carries significant regulatory and tax consequences; swaps are subject to swap dealer registration requirements, a higher margin (five-day versus one-day minimum liquidation time), extensive swap data reporting under parts 43 and 45, and different customer collateral segregation rules. Additionally, futures receive favorable Section 1256 tax treatment (60/40 long-term/short-term capital gains/loss, loss carrybacks), while swaps do not.

Causes of Action

The CME asserts two causes of action.

First, the CME alleges the CFTC’s actions were unlawful agency actions because they violated CEA Section 5c(c)(5)(B), which provides that “[t]he Commission shall approve a new contract . . . unless the Commission finds that the new contract . . . would violate this Act (including [CFTC] regulations).” The CME claims essentially that treating a futures contract as a swap violates the CEA, based on case law that the CME characterizes as requiring a date certain for settlement as an element of a futures contract, a date that the BTCPERP–and perps generally–lack. The CME also challenges the Policy Statement as unlawful because it authorizes other designated contract markets (DCMs) to self-certify cryptocurrency perps as futures, thus violating the same provision of the CEA, in the CME’s view.

Second, the CME alleges the CFTC’s actions were arbitrary and capricious because the agency (1) failed to analyze the applicable statutory provision–i.e., the third prong of the swap definition at 7 U.S.C. § 1a(47)(A)(iii)); (2) effectively “rubberstamped” Kalshi’s application by reproducing Kalshi’s own arguments without independent analysis; (3) failed to acknowledge or explain its departure from its prior enforcement actions in which it classified perps as swaps; (4) failed to consider important aspects of the problem, including the “immense” policy implications of authorizing self-certification of an entire class of perps; and (5) relied exclusively on pre-Dodd-Frank case law regarding what a futures contract is without addressing the Dodd-Frank CEA amendment that defined a swap for the first time.

Relief Sought

The CME seeks vacatur of the CFTC’s order approving Kalshi’s BTCPERP futures contract as well as the Policy Statement.

The CME also seeks declarations that Kalshi’s bitcoin perp and similar perpetual digital commodities contracts are swaps under the CEA, that it is unlawful for the CFTC to authorize listing such products as futures, and that the CFTC has acted unlawfully by failing to stay the listing of perpetual digital commodities contracts submitted via self-certification under 17 C.F.R. § 40.2.

Key Takeaways

This lawsuit demonstrates that there are significant competitive and regulatory issues surrounding certain crypto products. The listing of perps appears to present a competitive threat to the CME.³ Although DCMs such as Kalshi and the CME can list both futures and swaps for trading, given the more beneficial regulatory and tax structure for futures, the CME appears to be seeking to force its competitors to list perps, if at all, as swaps, possibly believing that such products will not be as successful in that form and will therefore not be as much of a competitive threat to the CME.

The case presents a fundamental question of statutory interpretation–whether perps are swaps or futures under the CEA–with enormous implications for how these and other products are regulated, taxed, and traded in the United States. Given the CFTC and Securities and Exchange Commission’s joint request for comment,⁴ issued on the same day as the CME’s complaint was filed, seeking input on questions including (1) treatment of novel or emerging products, (2) jurisdictional and interpretive questions, and (3) potential areas in need of greater clarity regarding regulatory definitional lines, the CFTC’s perp actions may be only the beginning of product characterization battles.

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 https://storage.courtlistener.com/recap/gov.uscourts.dcd.293632/gov.uscourts.dcd.293632.1.0.pdf.
² See, e.g., CME sues US CFTC over letting Kalshi, Coinbase offer perpetual futures | Reuters. The CME is the largest futures exchange in the United States and traces its roots to 1898.
³ See, e.g., The CFTC has sparked a potential revolution on Wall Street. Exchange stocks are dropping (“the regulatory approval of perpetual futures for bitcoin ignited concerns that a new wave of trading products could pose an existential threat for Wall Street” and noting that the CME’s stock was down more than 8% over the two trading days after the CFTC approved BTCPERP futures); see also Complaint at paragraphs 29 (stating that BTCPERP futures are a “product targeting retail investors that is intended to, and will, directly compete with CME’s products aimed at the same customer base”) and 43 (“[t]he Order enables Kalshi to enter the market for cryptocurrency futures and to compete—on an unfair and unlawful basis—with CME.”)).
⁴ See Joint Request for Comment on Further Definition of “Swap” and “Security-Based Swap” and on Alternative Compliance, available at https://www.cftc.gov/media/14246/CFTC_SEC_JointRFCSwapDefinitions061826/download.