Summary: The Chicago Mercantile Exchange has filed a lawsuit in Washington, D.C., federal court challenging the U.S. Commodity Futures Trading Commission’s decision to allow Kalshi and Coinbase to list perpetual futures. CME maintains the instruments are swaps within the meaning of the 2010 Dodd-Frank reforms and says the CFTC’s May 29 approvals - including a policy statement enabling futures exchanges to offer similar contracts - were arbitrary and capricious.
The complaint, lodged on June 18, names the CFTC and its chairman, Michael Selig, as defendants and asks the court to void the regulator’s May 29 approval allowing Kalshi to list a bitcoin perpetual future. The suit also targets the related policy statement that cleared the way for futures exchanges to list comparable perpetual contracts. Kalshi and Coinbase are not defendants in the litigation.
CME’s core legal argument is that perpetual futures should be classified as swaps under Dodd-Frank, a characterization the CFTC previously accepted, and that the recent approvals represented an abrupt reversal. The exchange said the agency’s actions inflicted what it described as “textbook competitive injury” by permitting Kalshi, Coinbase and other entrants to compete for retail customers in products that CME contends fall under the swaps regulatory regime.
A CFTC spokesperson dismissed the lawsuit as "frivolous." The spokesperson added: "Rather than compete in the marketplace, the CME has decided to undertake lawfare against the agency and the Trump Administration’s pro-innovation agenda. Incumbents fear the future and having to compete on a level playing field."
The CFTC announced on the same day as the Kalshi approval that it would not object if Coinbase allowed U.S. investors access to its foreign perpetual futures tied to cryptocurrencies. The agency’s position effectively permitted both a prediction markets platform and a cryptocurrency exchange to offer perpetual contracts to U.S. investors under the futures label.
Perpetual futures, sometimes called perpetual contracts, are derivatives that mirror the price movements of underlying assets such as cryptocurrencies and allow traders to employ high degrees of leverage. These instruments do not have set expiration dates, enabling positions to be held indefinitely, and can receive favorable tax treatment. Market data cited in the complaint notes that perpetual futures trading volume rose 29% last year to $61.7 trillion, reflecting traders’ appetite for tools to profit from cryptocurrency volatility.
Kalshi spokesperson Elisabeth Diana responded: "This isn’t about the law, it’s about the fear of competition." Faryar Shirzad, Coinbase’s chief policy officer, said: "Competition and innovation are the bedrock of vibrant financial markets and we commend the CFTC for onshoring modern contract structures that benefit American investors."
In an editorial published May 29, Chairman Selig argued that permitting perpetual futures was consistent with the CFTC’s "statutory obligation to promote responsible innovation," and he framed the approvals as supportive of the administration’s aim of positioning the United States as the "crypto capital of the world." The CFTC currently has a single commissioner in office, Selig, rather than its usual five-member commission.
The lawsuit comes against a backdrop of other legal challenges involving the CFTC. The agency is also engaged in litigation with multiple U.S. states over prediction markets, which allow people to wager on the outcomes of events such as sporting contests and elections; many states regard such wagers as a form of gambling. CME’s filing seeks judicial relief that would unwind the agency’s recent approvals and restore the prior regulatory characterization of these contracts as swaps under Dodd-Frank.
Impacted sectors and market response
Shares of CME and Intercontinental Exchange, the parent of the New York Stock Exchange, fell after the CFTC’s decision, a move the lawsuit cites as evidence of competitive harm to incumbent exchanges. The filing contends the approvals open the door for new entrants to capture retail trading volume in leveraged crypto derivatives, intensifying competition in the derivatives and exchange sectors.
The CFTC’s decision and the ensuing litigation also touch the cryptocurrency market by formally allowing perpetual contracts tied to digital assets to be offered to U.S. investors under a futures framework. Market participants highlighted by the filings — Kalshi and Coinbase — issued statements defending the approvals and framing the dispute as a contest between incumbents and new market structures.
Legal posture and next steps
CME’s suit asks the federal court to vacate the May 29 approvals and related policy statement. The CFTC has publicly characterized the suit as lacking merit, while Kalshi and Coinbase have emphasized competition and innovation. The litigation will test the agency’s latitude in classifying novel derivatives and may have broader implications for how exchanges and platforms structure leveraged crypto products for U.S. customers.