CFTC tells CME to put up or shut up on perps: show us the harm 🤝

The U.S. Commodity Futures Trading Commission is asking a federal court to side against CME Group in its challenge to the agency's new perpetual futures policy, arguing the derivatives exchange has not demonstrated it is actually being harmed. In a brief filed Friday, the CFTC said CME lacks legal standing to contest the framework because it has not plausibly alleged an actual or imminent financial injury. "Allegations of increased competition, without any plausible inference of an imminent financial injury," don't give CME the legal standing to challenge the CFTC's actions, the agency wrote, adding that volume in crypto futures at the CME has actually risen since its policy shift.

The dispute stems from the CFTC's May move to approve the first U.S. bitcoin perpetual futures contract from Kalshi and to signal it would regulate such products on a case-by-case basis as futures. The agency said at the time that it was responding to President Donald Trump's crypto agenda, which included bringing perps into domestic trading. CME, operator of one of the world's leading derivatives venues, objected in court, contending that perpetual contracts are not futures because they have no expiration date and should instead be treated as swaps under a different regulatory regime.

In its latest filing, the CFTC sharpened that point, arguing CME cannot simultaneously tell investors it has not seen demand for perps and that the products are not substitutes for the futures it already lists. "CME must plausibly allege an actual or imminent increase in competition," the agency argued. "CME has not even done that." The CFTC first asked a federal judge to dismiss CME's case last month, and the new brief expands on that motion. Spokespeople for CME did not immediately respond to a request for comment on the filing.

Perpetual futures allow traders to speculate on the future price of an asset, typically with leverage, and the contracts do not include a built-in expiration date. They have become a dominant form of trading in overseas crypto derivatives, and the CFTC's policy was framed as a step toward enabling a domestic market for the products. The agency's filings in the CME case, together with its initial May approval, are now shaping the legal ground rules for any U.S. venue that wants to list or trade perps going forward. The court has not yet ruled on the CFTC's motion to dismiss.