CME Group CEO Terry Duffy said CME would sue the CFTC on Thursday, arguing that perpetual Futures Contract are essentially swap contracts under the Dodd-Frank Act.
CME Group , the world's largest operator of Futures Contract trading, is planning to sue the U.S. Commodity Futures Trading Commission (CFTC) over its decision to approve perpetual Futures Contract for cryptocurrencies.
The information was confirmed by Terry Duffy, the outgoing CEO of CME, in an interview with CNBC's "Fast Money" program on Wednesday, and CME later confirmed to Reuters that the lawsuit would be filed on Thursday.
The dispute centers around the legal classification of this type of Derivative instrument. According to Duffy, perpetual Futures Contract are essentially swap contracts under the Dodd-Frank Act, not Futures Contract as the CFTC is classifying them, and therefore should be subject to a different set of regulations regarding clearing, reporting, and trading locations.
He argued that the law clearly defined the boundary between these two types of instruments, whereby when two parties exchange payments with each other, the transaction should be XEM a swap contract.
Duffy also pointed out that CME holds exclusive licenses for several key market benchmark indices, meaning competitors' perpetual Futures Contract products would still be dependent on CME's infrastructure, and criticized the CFTC for approving the new tool much faster than the usual review process.
The context of approval and regulatory response.
The dispute stems from the CFTC's late-May approval of the Kalshi prediction market to list Bitcoin perpetual Futures Contract , while simultaneously granting Coinbase a separate license to connect US customers with offshore perpetual futures products. This marked the first time this type of instrument, long Capital by offshore platforms, was directly accessible to US traders through regulated domestic exchanges.
The nature of perpetual Futures Contract is that they are Derivative instruments with no expiration date, operating on periodic Capital fee payments between traders instead of traditional monthly contract shifts, and can utilize leverage up to 50:1, a factor that significantly amplifies both profit and loss risks.
CFTC Chairman Michael Selig defended the approval decision, arguing it was a way to bring one of the most liquidation cryptocurrency markets under domestic regulation. A CFTC spokesperson told Reuters that the agency looked forward to responding to the allegations and dismissed the lawsuit as “unfounded.”
Previously, Duffy had repeatedly issued stern warnings about the systemic risks from these products. Earlier this month, he compared current market conditions to the period before the 2008 financial crisis, arguing that the housing market at that time had been replaced by a speculative market including forecast markets, and warned that this could be a disaster waiting to happen.
He said he had spent eight months with the CME board preparing for this legal challenge and affirmed his readiness for a significant confrontation.
The threat of legal action came on the same day CME announced Duffy's successor. He will leave the position in March 2027, handing over the role to Chairwoman and Chief Financial Officer Lynne Fitzpatrick, who will become the first female CEO in CME history.
