CFTC Seeks to Block CME Lawsuit Challenging Kalshi's Bitcoin Perpetual Futures

The Commodity Futures Trading Commission (CFTC) has asked a federal judge to dismiss a lawsuit by the Chicago Mercantile Exchange (CME), which challenges the CFTC's decision to allow Kalshi to list Bitcoin perpetual futures contracts on its platform.

The dispute centers around how regulatory bodies classify perpetual futures, which have become common in crypto markets. Unlike traditional futures, perpetual contracts have no expiration date and use a funding-rate mechanism involving regular payments between long and short traders to keep the contract's price tied to the underlying spot price.

Kalshi pursued approval to offer perpetual futures contracts tied to Bitcoin's spot price and was approved by the CFTC in May. However, the CME argues that Kalshi's Bitcoin perpetual meets the Commodity Exchange Act's definition of a swap and should be regulated more forcefully under this standard.

The CFTC argued that CME has not proven any financial injury from Kalshi's product that would give it standing to sue, saying 'the complaint fails to plausibly allege that CME will suffer an increase in competition as a result of the challenged actions.'