CME sues CFTC over onchain perpetual futures as 24/7 oil bid blocked

CME Group, the largest derivatives exchange operator in the United States, has filed a lawsuit against the Commodity Futures Trading Commission (CFTC) and its chairman, Mike Selig, challenging the regulator’s decision to permit Kalshi and Coinbase to list crypto perpetual futures. These decentralised contracts allow leveraged speculation on asset prices with no expiration date, a structural feature that sits at the heart of the dispute.

CME’s core legal argument is that perpetual futures are mislabelled by the CFTC and should be classified as swaps, which carry distinct obligations including five-day margin requirements and mandatory registration with the regulator. CME chairman Terry Duffy contends that when two parties exchange payments, that constitutes a swap under established law, and that the CFTC bypassed proper protocol in allowing perps without addressing enforcement questions, such as how non-US traders would be blocked from CFTC-regulated platforms. The backdrop includes a surge in interest in round-the-clock oil perps on offshore decentralised finance (DeFi) venues such as Hyperliquid during the Iran conflict, which appears to have sharpened political pressure on both sides.

The dispute escalated further when the CFTC blocked CME’s attempt to fast-track 24/7 trading in West Texas Intermediate (WTI) crude oil futures, a traditional expiring contract rather than a perpetual. Selig publicly criticised CME’s move as wholly inappropriate. Jake Chervinsky, chief executive of the Hyperliquid Policy Center, a Washington DC non-profit backed by a US$28 million Hyper Foundation initiative, described CME’s position as extraordinary given that the CFTC is offering registered entities, CME included, the right to offer the same products. Federal court action is now awaited, with offshore perps volume reportedly reaching $60 trillion last year, underscoring how much regulatory ground is at stake.