U.S. CFTC Challenges CME's Standing in Lawsuit Over Perpetual Contracts

ChainCatcher report: In its latest court filing, the U.S. Commodity Futures Trading Commission (CFTC) stated that CME has merely claimed increased competition without reasonably demonstrating imminent financial harm, which is insufficient to establish standing to challenge its perpetual futures policy. The CFTC noted that, following the policy adjustment, CME’s cryptocurrency futures trading volume actually increased. In May of this year, the CFTC approved Kalshi’s first Bitcoin perpetual futures contract and indicated it will regulate such products on a case-by-case basis under futures regulations. CME, however, argues that perpetual futures, which have no expiration date, should be classified as swaps rather than futures and thus fall under a different regulatory framework. Last month, the CFTC requested a federal judge to dismiss the case; this filing further elaborates its rebuttal of CME’s standing. The CFTC also pointed out that CME previously told investors it had not heard customer demand for perpetual futures and that such products could not replace its existing futures contracts—claims that contradict its current legal and earnings call statements. TD Cowen policy analyst Jaret Seiberg believes CME may still have the upper hand on arguments regarding standing and classification as swaps. However, he expressed concern that if the perpetual futures market continues to grow during the litigation, reversing the market upon CME’s potential victory could become significantly more complex.