CME Group plans to sue the Commodity Futures Trading Commission over the agency's approval of crypto perpetual futures, the world's largest derivatives exchange operator announced Wednesday evening on CNBC. Outgoing Chief Executive Terrence Duffy said the case would be filed as soon as Thursday and would argue the contracts should be regulated as swaps under the Dodd-Frank Act.
Duffy disclosed the plan in a Fast Money interview on Wednesday and said CME had spent eight months preparing the challenge with its board. The suit targets the CFTC's late-May approval of Kalshi's BTCPERP contract and a parallel action clearing Coinbase to route US customers to its offshore Deribit affiliate. CME later confirmed the filing plan to CNBC. A CFTC spokesperson called the planned action "frivolous."
The statutory theory turns on a definitional line drawn in the Dodd-Frank Act. The Commodity Exchange Act defines a futures contract by reference to a delivery or expiration date. Perpetual contracts have neither; the two sides exchange periodic funding payments to keep the contract price tethered to spot.
"Under the Dodd-Frank Act, it clearly defines what a swap is and what a future is, and when there's two parties exchanging payments to each other, that's deemed a swap," Duffy said on the broadcast. He said the funding-rate mechanism brings perpetuals inside the swap definition.
