The US Commodity Futures Trading Commission (CFTC) has renewed its request to dismiss CME Group's lawsuit over cryptocurrency perpetual futures. In an October 16 court filing, the regulator argued that CME had failed to show how its approval of a competing Bitcoin contract caused financial harm.
The dispute follows the CFTC's May decision allowing prediction market Kalshi to offer a Bitcoin perpetual contract as a futures product.
The CFTC's latest reply supports a motion to dismiss filed on September 2 in federal court in Washington, D.C. The agency maintains that CME has not established legal standing, which requires the exchange to show that the challenged action caused, or threatens to cause, a qualifying injury.
“CME must plausibly allege an actual or imminent increase in competition,” the regulator wrote. It added, “CME has not even done that.”
The agency also pointed to higher crypto futures trading volumes at CME since its policy change. It argued that increased competition alone does not demonstrate an immediate financial loss.
The regulator contrasted CME's lawsuit with comments the exchange made to investors. During a July earnings call, CME Chairman and CEO Terry Duffy said customers had not asked for perpetual contracts. He also said CME could introduce similar products if demand changed.
CME filed its lawsuit on June 18, challenging the CFTC's approval of Kalshi's Bitcoin perpetual futures and the accompanying policy statement. The exchange argues that contracts without a fixed expiration date should fall under rules for swaps rather than futures.
Unlike standard futures, perpetual contracts allow traders to maintain positions without a set expiry. They generally use recurring payments to keep contract prices close to the price of the underlying asset. Traders can also use borrowed funds to increase their exposure.
CME contends that the CFTC changed its approach without properly applying the Commodity Exchange Act and requirements introduced under the Dodd-Frank Act. It wants the court to overturn the approval and the related policy statement.
The regulator, however, approved Kalshi's BTCPERP contract on May 29. Its published policy allows the agency to examine other perpetual products individually. The court has not decided whether CME can proceed with its case or whether the contracts should be treated as swaps.
Separately, CME scheduled Bitcoin Cash and Uniswap futures for October 19, following a September 22 announcement. CFTC records show certifications for the four standard and micro contracts, although the exchange's announcement made the launch subject to regulatory review.
The planned Bitcoin Cash contracts cover 250 BCH, while the micro version covers 25 BCH. Uniswap futures cover 10,000 UNI, with micro contracts covering 1,000 UNI.
These fixed-term futures would expand CME's crypto derivatives range. They are separate from the perpetual products at the center of the court dispute.
TD Cowen policy analyst Jaret Seiberg said in an October 19 client note that CME could still succeed on its standing argument and its claim that perpetuals are swaps. He also warned that continued market growth during litigation could complicate efforts to reverse the approvals if CME wins.
For now, the CFTC's motion remains before the federal court. No final ruling on the underlying classification dispute has been announced.
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