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CME's disadvantage is self-inflicted, regulator says
To establish standing in federal court, a plaintiff generally must show a concrete injury linked to the defendant's conduct that a favorable ruling would likely address. CME claims the approval gave newer exchanges an unfair competitive advantage by allowing them to offer perpetual contracts under the futures framework, when those products should instead face the rules applying to swaps.
The CFTC disputes the claimed injury. Because CME is also a designated contract market, it can seek permission to list perpetual futures under the same process available to Kalshi. Any disadvantage arising from CME's decision not to list the contracts is therefore "self-inflicted," the agency argued, and a party cannot establish standing by declining to use the same regulatory opportunity available to its competitors.
The regulator also pointed to CME's own trading figures, noting that the exchange's Bitcoin and Ether futures volumes in June and August exceeded their May levels, when the Kalshi approval was issued — part of its argument that CME has not shown a concrete competitive loss caused by the approval.
Reclassification would not remove the competition
The CFTC raised a second standing argument involving redressability. Even if the court classified perpetual contracts as swaps, competing venues could still offer economically similar products, meaning a ruling in CME's favor would change the regulatory category without removing the competition CME claims is harming its business.
The agency also argued that CME's competitive interests do not fall within the "zone of interests" protected by the Commodity Exchange Act provisions cited in the lawsuit, a test asking whether the interests a plaintiff seeks to protect relate to the statute's purposes. CME has presented the dispute as an issue of regulatory consistency and investor protection; the CFTC's motion frames it as a competitor attempting to use litigation against products it could offer itself.
The futures-versus-swaps question
Perpetual contracts give traders continuing price exposure without a predetermined expiration date, using recurring funding payments to keep prices aligned with the referenced asset. Traditional futures usually have fixed expiration and settlement dates. CME argues the lack of an expiration date places perpetuals within the swap definition established under the Dodd-Frank Act. The CFTC disagrees, maintaining that a futures contract does not require a fixed expiration date under the Commodity Exchange Act or existing regulatory interpretations.
The dispute began after the regulator approved Kalshi's BTCPERP contract on May 29, opening a regulated U.S. venue to Bitcoin perpetual futures after the products had largely remained on offshore exchanges. CME CEO Terry Duffy has criticized the approval process and warned that perpetual products could encourage excessive speculation. Kalshi has described the lawsuit as an effort to limit competition. Perpetual structures are entering the U.S. regulatory conversation from every direction, from stock perpetuals to equity perps framework proposals.
What happens next
The CFTC reviewed Kalshi's application under Regulation 40.3, which allows a designated contract market to request formal approval before listing a new product, and concluded the contract complied with the Commodity Exchange Act and CFTC rules. Chair Michael Selig has rejected criticisms of the decision, saying regulated perpetual contracts remain subject to domestic leverage, margin and customer protection requirements, and that U.S. law does not require futures to carry fixed expiration dates.
CME must file its opposition to the dismissal motion by Oct. 2, and the CFTC has requested an oral hearing, though the court will decide whether one is necessary. The judge can dismiss the case on standing or other procedural grounds without resolving whether perpetual contracts are futures or swaps, which would leave the CFTC's existing policy and the Kalshi approval in place. If the court finds CME has standing, it could proceed to examine the deeper classification question that will shape how perpetual products are regulated across U.S. markets.
