CME Group has officially filed its lawsuit against the Commodity Futures Trading Commission on Thursday, following CEO Terry Duffy's announcement on Wednesday. As reported by Bloomberg, the lawsuit stems from the CFTC's decision to approve perpetual futures contracts, which Duffy argues should be classified as swaps under the Dodd-Frank Act. Duffy told CNBC that he's 'never shied away from one, and I won't shy away from this' and that the company is not taking this matter lightly. Speaking on CNBC's Fast Money on Wednesday afternoon, Duffy emphasized that he's been working on this plan with his board for the past eight months and is prepared to proceed with the litigation. CME confirmed the news of the lawsuit in an emailed statement to Reuters, with the company stating it will pursue the legal challenge against the regulatory approval. During the interview, Duffy specifically accused CFTC Chair Michael Selig of violating the Commodity Exchange Act by approving perpetual futures that don't meet futures contract requirements. The legal challenge comes days after several regulated perpetual products gained approval in the United States, opening a market that has long been dominated by offshore exchanges.
Jake Chervinsky, chief executive of the Hyperliquid Policy Center, has accused CME of using its lawsuit to protect a monopoly position in the derivatives market. In a June 19 post on X, Chervinsky called CME's lawsuit against the CFTC a 'shocking miscalculation' and 'an unforced error', writing that the exchange had revealed itself as 'a petty incumbent monopolist afraid of competition' after being viewed for years as a dominant force in U.S. derivatives markets. The Hyperliquid Policy Center cited Better Markets data showing CME controls about 92% of U.S. exchange-traded derivatives volume, stating that 'when one venue holds that much volume, everyone else carries the cost. Less choice, higher prices.' Chervinsky argued that CME's decision to sue the regulator showed the exchange was attempting to defend its incumbent position as competition entered the market. According to the Hyperliquid Policy Center, perpetual futures represent the first genuinely new derivatives product to reach regulated U.S. markets in more than a decade, with U.S. traders previously forced to access similar products through offshore venues while regulated versions remained unavailable domestically.
Shares of CME Group, Cboe Global Markets, and Intercontinental Exchange (parent of the New York Stock Exchange) declined following the CFTC's approval of perpetual crypto futures. According to Reuters, investor concerns over the long-term competitive impact are already visible in the market as investors assess the threat that perpetual futures could pose to established exchange operators. CME Group shares fell by more than 2-4% following the approval announcement, while Cboe dropped as much as 7.6%. The market reaction reflects investor concerns that the arrival of perpetual futures on competing platforms like Kalshi represents a direct competitive threat to CME's established position. No formal lawsuit has been filed yet, but Duffy's language has moved well past 'concerned' territory into 'our lawyers are warming up' territory, as reported by Bitget.
Duffy asserted that CME Group has an exclusive license with every single provider of the benchmarks, which would require all perpetual futures to go through CME regardless of the regulatory classification. Speaking on CNBC, he stated that 'they would have to list them as swaps, if that's the way that it came out'. Duffy's core complaint centers on two key arguments: first, he argues the contracts may not even qualify as futures under the Commodity Exchange Act, which would mean the CFTC approved something it potentially doesn't have the authority to approve. Second, he warned that perpetuals could incite 'bad behavior' among retail traders due to excessive leverage. Duffy had warned at a conference earlier in the month that this extreme leverage, combined with the automatic liquidation models prevalent in the sector, poses a significant threat to retail investors who may not fully grasp the corrosive effects of funding rate costs on their positions. He had also criticized the CFTC's approval process as hasty, saying it bypassed a traditional 'full review' for what it deemed a 'novel and complex' instrument. Duffy went further when asked if he thought the CFTC was 'misrepresenting certain facts,' saying that he did believe 'to an extent' that the agency was. He pointed to the CFTC's release on 24/7 trading, saying the agency described that as a rule when it was not a rule, stating 'I think there's a lot of problems.' A CFTC spokesperson told Bloomberg that CME had chosen litigation instead of competing directly in the market, characterizing the challenge as opposition to the Trump administration's pro-innovation regulatory approach and arguing that established firms were resisting increased competition.
As reported by Reuters, perpetual futures, or perps, are derivatives that don't have an expiration date and allow people to bet on the price movement of assets without owning them directly. The CFTC approved bitcoin perpetual contracts as futures contracts and issued a no-action stance for Coinbase Financial Markets, Inc., for its plans to offer digital commodity derivatives products. According to Reuters, cryptocurrency exchange Coinbase and prediction market platform Kalshi last month said they would launch perpetual crypto futures after the CFTC gave them the green light, marking the first time such instruments will be available to U.S. investors through domestic, regulated exchanges. Perpetual futures also permit high degrees of leverage — often as much as 50-to-1 — enabling investors to amplify their exposure to market moves. Perpetual futures have been the dominant instrument in crypto derivatives for years, commanding the vast majority of trading volume on platforms like Binance, Bybit, and OKX. Kalshi later expanded beyond Bitcoin-linked contracts, launching additional perpetual products tied to cryptocurrencies including Ethereum, XRP, and Hyperliquid. The exchange has since disclosed that its perpetual futures business generated more than $5.5 billion in trading volume within weeks of launch, as reported by crypto.news. Coinbase secured a regulated route to offer certain crypto perpetual futures products in the U.S. through infrastructure connected to Deribit, the derivatives exchange it acquired. The case follows the launch of regulated perpetual futures products that, according to earlier crypto.news reporting has already generated more than $1 billion in trading volume.
The CFTC and SEC have jointly requested public input on how U.S. rules define swaps, security-based swaps, and related derivatives products, as reported by crypto.news. The agencies want feedback on swaps, security-based swaps, mixed swaps, and emerging derivatives products rules, with comments remaining open for 60 days after publication in the Federal Register. CME's complaint alleges that the CFTC departed from its own historical approach toward similar instruments and bypassed procedures Congress established for that market segment. According to Bloomberg, the filing further alleges that the approval process did not go through formal rulemaking despite creating a new framework for perpetual contracts. The complaint states that Chairman Selig effectively overrode statutory definitions established by Congress when authorizing the products. Legal analysis from StarkWare General Counsel Katherine Kirkpatrick suggested the outcome may not be straightforward. In a June 18 X post, she noted that the CFTC previously treated perpetual products as swaps during its enforcement case against Binance, although she added that enforcement positions do not create binding precedent. Kirkpatrick also stated that federal law does not require the CFTC to spend 45 days reaching a decision or maintain a quorum before acting, meaning the chair may have authority to approve products independently. Addressing CME's competitive injury argument, she said the exchange would still need to demonstrate actual harm and noted that offshore perpetual trading venues already compete with CME regardless of the agency's decision. According to Kirkpatrick, perpetual contracts remain a relatively new product category in the U.S., making it unlikely that Congress specifically addressed them when passing Dodd-Frank. She concluded that 'Perps are still new(ish), which means they weren't intended to be addressed by Congress when Dodd-Frank was passed. The CFTC has discretion to categorize novel products, & its choice of future vs swap here is reasonable.'
