The US Commodity Futures Trading Commission (CFTC) asked the District of Columbia federal court on Sept. 2 to dismiss CME Group’s lawsuit challenging the classification of Kalshi’s crypto perpetual contracts. The legal dispute began on June 18 when CME sought to overturn the CFTC’s approval of Kalshi’s Bitcoin perpetual contracts (BTCPERP) and its accompanying policy statement. Kalshi launched the contracts in June, marking the first time US traders could access Bitcoin perpetual products on a regulated domestic exchange.
CME argued that the regulator gave an unfair competitive advantage to the newcomer exchange by allowing Kalshi to offer perpetuals under a futures regulatory framework. According to CME, BTCPERP products should be subject to swap rules instead. CME CEO Terry Duffy previously criticized the approval process, warning that perpetual products encourage excessive speculation. The core issue centers on classification: whether perpetual contracts legally qualify as futures or swaps, as the two categories carry vastly different registration, trading, and regulatory oversight requirements.
Regulator Labels Claim as ‘Self-Inflicted Injury’
In its defense, the CFTC characterized CME’s claim of competitive harm as a “self-inflicted injury.” The regulator asserted that CME lacks legal standing because the exchange could have listed similar products under the same policy framework, but chose not to do so. Approval for Kalshi’s BTCPERP contract was issued on May 29 via Regulation 40.3, a product approval pathway for designated contract markets.
To dismantle CME’s business arguments, the CFTC presented data showing that the exchange’s Bitcoin and Ether futures trading volumes actually exceeded May levels throughout June and August. This data demonstrates that CME suffered no concrete competitive injury following Kalshi’s entry into the market. Even if perpetuals were classified as swaps, the CFTC argued that competing exchanges could still offer economically equivalent products, meaning a ruling in favor of CME would not eliminate market competition. CME now has until Oct. 2 to file its opposition to the CFTC’s motion to dismiss, while the regulator has also requested oral arguments.
WTI Expansion Ambitions Amid the Lawsuit
Despite the legal pressure, Kalshi plans to seek CFTC approval next week to launch expiration-free WTI crude oil perpetual contracts. Designed to trade 24 hours a day from Monday through Friday, the contract could become the first WTI perpetual product on a regulated US exchange. However, the company faces mounting legal challenges after New Jersey asked the US Supreme Court to review a Third Circuit ruling that has shielded Kalshi’s sports contracts from state gambling laws.
For traders, these courtroom battles represent far more than legal sparring. The judge’s eventual ruling will decide whether their sole gateway to Bitcoin perpetual instruments on a domestic exchange remains open, or is shut down to protect the legacy competitor status quo.
Source: crypto.news.
Also read: Ireland Prepares Tax-Free Investment Accounts for 2027 - But Crypto Excluded Due to High Risk
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
