CME Group, the largest derivatives exchange operator in the U.S., is in a highly unusual public fight with its own regulator, the Commodity Futures Trading Commission, after the agency opened the door to blockchain-based perpetual futures products.
Last month, CME sued the CFTC and its chairman, Mike Selig, challenging his decision to allow prediction market platform Kalshi and crypto exchange Coinbase (COIN) to list crypto perps. Those contracts let traders take leveraged positions on an asset’s price without an expiration date.
The case now awaits action in federal court. Its outcome could shape how the U.S. approaches a fast-growing segment of the market, with non-U.S. perpetuals volume reportedly reaching $60 trillion last year.
CME says the products are being classified under the wrong legal bucket
CME’s case argues that the agency is mislabeling the products and, as a result, misapplying the law. Futures contracts have an end date. Perpetual contracts are built so traders can hold a view on an asset’s future price without any deadline.
The lawsuit says those perps are harmful to CME’s longer-dated futures products and argues that the CFTC’s abrupt acceptance of them did not account for the consequences.
Tensions between the two sides intensified around the start of the Iran conflict, when interest surged in perpetual contracts tied to oil prices. Trading was taking place around the clock on offshore decentralized finance exchanges such as Hyperliquid and on blockchain prediction markets tied to oil.
Backers of the CFTC’s direction accuse CME of trying to block competition
People aligned with the CFTC’s reform push have voiced deep frustration with the exchange’s legal challenge.
“It is unbelievably unusual to see the largest exchange in America attacking its own regulator, where the regulator is basically saying everybody who's registered, including the CME, can offer these types of products, and the CME says no one should be allowed to offer them,” Jake Chervinsky, CEO of Hyperliquid Policy Center, said in an interview.
Hyperliquid Policy Center, or HPC, is a Washington, D.C.-based non-profit focused on compliant DeFi in the U.S. Its work centers heavily on perps and on-chain financial infrastructure, and it is backed by a $28 million initiative from the Hyper Foundation.
The dispute widened when CME’s 24/7 oil futures push was blocked
Not long after CME filed suit, the fight took another turn. CME tried to fast-track 24/7 trading for West Texas Intermediate crude oil futures, but the CFTC blocked the effort.
The proposed 24/7 WTI contract was a traditional expiring futures product, not a crypto-style perpetual swap. CME had said investors wanted to manage positions “whenever news breaks.”
CFTC representatives declined to comment. At the time, Mike Selig wrote on X that “CME's decision to disregard the Commission's effort to undertake a reasoned analysis of the critical issues at stake is wholly inappropriate.”
Terry Duffy says perpetuals should be treated as swaps
CME played a major role in getting bitcoin futures listed and helped crypto gain acceptance in the U.S. Over the years, the exchange has maintained significant influence in Washington, due in part to its outspoken chairman, Terry Duffy.
“The definition of a swap is pretty clear,” Duffy said in an interview with CoinDesk. “When two parties exchange payments to each other, that is deemed a swap.”
He added that swap contracts come with obligations, including maintaining five-day margin and registering with the CFTC as a participant in the swaps market.
Duffy argued that the CFTC failed to follow the required protocol, which he described as effectively the law of the land. He also questioned whether the agency is prepared to enforce its emerging perps policy, including how it would stop non-U.S. traders from using Kalshi or other CFTC-regulated venues.
“What are you doing to police U.S. participants from not participating in something that it's illegal for them to do?” Duffy asked.
“I've not seen an answer to that yet, but yet they're holding up my 24/7 contract of self certification,” he said.
Duffy has sparred with digital-asset figures before. He once debated former FTX CEO Sam Bankman-Fried over efforts to remove intermediaries from market structure, months before FTX collapsed and Bankman-Fried was later imprisoned after a fraud-related conviction.
CME says institutions are not asking for perpetuals as a hedge
On CME’s recent second-quarter earnings call, Duffy addressed the growing presence of perpetual futures markets. He said institutional clients do not use perpetuals for hedging.
According to Duffy, CME has “the full technical and operational capabilities to launch perpetual futures” but “have not heard demand from our customers for these products.” He also described competitors’ perp markets as “an incubator system that I'm not paying for.”
Lawyers say commodity futures and crypto perpetuals do not map neatly onto each other
Liz Davis, partner and co-chair of the financial services practice at Davis Wright Tremaine, said the structure of traditional commodity futures differs from the structure seen in crypto markets.
“These perpetual contracts that started out in the crypto space are a different type of product than, say, pork bellies or crude oil,” Davis said in an interview.
She said there is built-in tension when those newer products are offered on top of traditional commodities. “Here you have delivery issues, and it really isn’t traded 24/7, because you have monthly contracts that you roll from month to month.”
Davis said there is a long list of issues to work through when the underlying commodities tied to perps may trade only five days a week and can change hands only during set hours, unlike always-on crypto markets.
“You just need to think through the various issues in terms of marginal liquidity and custody over the weekend; staffing and resources; your surveillance now needs to go over to the weekends and holidays, etc.,” she said.
Crypto and DeFi backers see an incumbent leaning on regulation
To crypto-native traders and DeFi supporters, Duffy’s stance on perps looks like a familiar reaction from large incumbents facing innovation that could threaten their dominant position.
“It’s really going to come down to this sort of policy fight between this massive incumbent and the regulator who is trying to allow challengers to that incumbent, allowing competition that the incumbent doesn't want to see happen,” Chervinsky said.
He added: “The issue with the CME isn't whether they're pro or anti-crypto. It's an incumbent using regulation to hold off competition, and they're willing to take opposite positions depending on the moment to try to beat back the competition.”
The legal fight also turns on process, not only product design
The future of CFTC-backed perpetuals remains unsettled as CME prepares its case. Among its claims is that the agency effectively rubber-stamped Kalshi’s application, which was submitted one day before approval.
“The CFTC approved perps despite a history of arguing they are swaps and without issuing a regulation despite seeking public comment in April 2025,” Jaret Seiberg, a financial policy analyst at TD Cowen, said. He argued CME may have the “upper hand” in the dispute. “This distinction matters as the regulatory and tax regimes for swaps and futures are different.”
Selig is acting as the CFTC’s only sitting member
The CFTC is meant to be a five-member commission. At present, Chairman Mike Selig is its lone member, making him the agency’s only current internal voice.
He has sought to clear a path for U.S. crypto perpetuals, signing off on a Kalshi product and approving customer activity at Coinbase.
“It’s interesting that this is being done with a single-person commission,” Davis said. “When you have a five-person commission, the rulemaking doesn't go as quickly, because of the counter view. So you're sort of getting deprived of that counter view, other than the CME bringing suit and their commentary.”
Representatives for Kalshi and Coinbase declined to comment on the perpetuals regulatory situation.
The CFTC is moving through policy statements rather than formal rulemaking
So far, Selig’s agency has been opening this U.S. market through policy statements, not through a new rulemaking process that would formally invite comments from interested parties and give them a chance to influence the outcome.
CoinDesk noted that the approach resembles the path taken by the Securities and Exchange Commission in crypto, where the agency has issued a broad set of policy statements without yet putting durable formal rules in place.
The CFTC decided a case-by-case review process was suitable for perpetuals. Under that framework, Kalshi’s debut offering launched last month, and the company said it topped $1 billion in trading volume in less than a week.