CME Group CEO Terrence Duffy has filed a federal lawsuit against the Commodity Futures Trading Commission over the regulator's approval of bitcoin perpetual futures for Kalshi. The suit, announced this week, challenges the CFTC's late-May decision to let Kalshi list the first regulated U.S. perpetual futures — a move Duffy argues breaks the law. The case could reshape who gets to offer a product that's become the backbone of crypto trading globally.
Why Duffy says perpetuals are swaps
Duffy's central argument hinges on the Dodd-Frank Act. Perpetual futures have no expiration date and involve two parties exchanging a periodic funding rate. That structure, Duffy contends, legally makes them swaps — not futures. Under CFTC rules, swaps face a different regulatory track and can't be listed on designated contract markets like Kalshi's without going through a clearinghouse or swap execution facility. CME's lawsuit is expected to include an Administrative Procedure Act challenge, accusing the CFTC of using expedited review instead of full notice-and-comment rulemaking for a novel product.
Duffy also accused the agency of factual misrepresentation. He says the CFTC described a 24/7 trading release as a formal rule — when it wasn't. The claim adds a procedural edge to what's already a high-stakes legal fight.
CFTC pushes back
CFTC Chair Michael Selig isn't backing down. He defended the approval publicly, calling the lawsuit frivolous and arguing that it was 'time to approve regulated futures contracts that have no expiration date.' Selig's stance suggests the agency views perpetuals as a natural extension of existing futures authority — not a new swap category requiring a separate rulebook. The regulator approved Kalshi's product in late May after what it described as a routine review process.
What's at stake for the market
If a court reclassifies perpetuals as swaps, the fallout wouldn't stop at Kalshi. CME claims exclusive licensing agreements with every major benchmark provider for crypto derivatives pricing. That contractual web could block Kalshi, Coinbase, and Kraken from operating U.S. perp markets if the product is redefined. For CME, the suit is partly about defending that competitive advantage — a business interest wrapped in a legal principle.
The timing matters beyond the courtroom. The CLARITY Act, currently moving through the Senate, would formally codify CFTC authority over digital commodity derivatives. Whatever the court decides could influence how that legislation gets written — or whether it needs amendments. Lawmakers are watching.
What comes next
The lawsuit will likely be filed in federal court in Chicago, where CME is headquartered. No hearing date has been set. The CFTC has 60 days to respond. Meanwhile, Kalshi's perpetuals are live and trading — for now. The unresolved question: does a product that never expires fit a regulatory framework built around expiration dates? A judge will have to answer that one.
