CME sues CFTC over perpetual futures approval in battle for market share

Tensions are rising in the United States between established exchanges and new platforms over perpetual futures, commonly known as "perps."

According to Reuters, CME filed a lawsuit June 18 against the US Commodity Futures Trading Commission and its chair, Michael Seelig, in federal court in Washington, D.C.

The dispute centers on the CFTC's decision to allow perpetual futures. CME is challenging the regulator's approval last month of prediction market platform Kalshi's bitcoin perpetual futures listing, as well as its effective authorization of Coinbase to offer overseas digital asset perpetual futures to US investors.

CFTC Chair Seelig addressed concerns that the funding rate structure of perps encourages negative market behavior through unusually high fees, saying "the annual cost of holding a similar position in traditional futures is nearly identical."

"Perps are advantageous for investors because they do not require additional fees paid to the exchange to maintain a position," Seelig said. "This is not a product designed to be predatory or to generate controversy."

Global digital asset policy experts have characterized CME's lawsuit not as a straightforward legal dispute but as a defensive response to protect its existing market position. Miller Whitehouse-Levine, CEO of the Solana Policy Institute, told The Herald Business that "incumbent players will always try to protect their market share," adding that "under the CFTC's action, CME could also list perpetual futures — yet CME appears to fear that new market entrants will take away its share."

Whitehouse-Levine said CME "is already losing market share," adding that "as soon as the guidance on perpetual futures came out, their share price fell, and CME appears to be trying to protect its position by blocking new products from coming to market."

The CFTC and new platform operators argue that perps can be regulated under the existing futures framework if they meet certain conditions — namely that contract terms are standardized, trading occurs on an exchange, and central clearing, margin management and market surveillance systems are in place. CME, by contrast, argues that perps more closely resemble swaps. Unlike traditional futures, perps carry no expiration date and instead involve repeated funding fee payments.

The classification matters because it determines which regulatory framework applies. If recognized as futures, perps would fall under rules centered on futures exchanges, clearinghouses and futures commission merchants. If classified as swaps, they could be subject to the Dodd-Frank Act framework, which includes swap dealer registration, capital and margin requirements, reporting obligations, central clearing and trading on a swap execution facility.

Kim Jong-seung, CEO of Xcrypton, said "this is ultimately not a question of terminology but of market structure," noting that the classification determines "who can offer the product, how it can be sold to retail investors, how collateral and liquidation are managed, and what standards regulators use to assess risk."

Kim said the industry implications are significant. "When new platforms enter the market within the US regulatory framework, the competitive landscape for existing derivatives exchanges changes," he said. "This lawsuit is not about one specific product — it is a fight over the precedent of what regulatory framework the United States will place perpetual futures under."