CME Group has launched legal action against the US Commodity Futures Trading Commission (CFTC), arguing that the regulator acted unlawfully when it approved cryptocurrency perpetual futures contracts for prediction market operator Kalshi, according to a report by the Financial Times.
The lawsuit, filed in federal court in Washington DC, claims the CFTC failed to follow established regulatory procedures when authorising the contracts, which allow traders to maintain positions indefinitely rather than through traditional futures with fixed expiry dates.
Perpetual futures, widely used in offshore cryptocurrency markets, have become a growing point of contention between established derivatives exchanges and emerging prediction market platforms. Unlike conventional futures contracts, perpetuals do not expire or require physical settlement, making them a popular tool for leveraged speculation on asset prices.
The CFTC shifted its approach last month by permitting Kalshi to introduce a bitcoin perpetual futures contract while indicating that future applications would be reviewed individually. Rival prediction market operator Polymarket has also signalled plans to enter the perpetual futures market.
CME argues that the regulator’s approval process bypassed public consultation and failed to comply with legal requirements, including provisions under the Dodd-Frank Act introduced after the global financial crisis. The exchange contends that the decision undermines the regulatory framework governing US derivatives markets.
CME Chief Executive Terry Duffy has previously expressed concern over perpetual futures, arguing that the products encourage excessive speculation and are inconsistent with the traditional role of regulated futures markets.
The CFTC rejected the allegations, with a spokesperson describing the lawsuit as an attempt to block innovation and defending the agency’s approach to developing new financial products. Kalshi also dismissed the case, saying the dispute is driven by competitive pressures rather than legal concerns.
The legal challenge comes as the Trump administration continues to adopt a more accommodating stance toward both cryptocurrency and prediction markets. Federal regulators have scaled back numerous enforcement actions involving digital assets while also supporting the expansion of federally regulated prediction markets amid ongoing legal disputes with state gaming authorities.
The Trump family has financial interests linked to both the cryptocurrency sector and prediction market industry, including connections to Kalshi and Polymarket, adding further attention to the evolving regulatory landscape.
CME’s lawsuit names CFTC Chair Michael Selig in his official capacity, alleging he exceeded the agency’s authority by approving the contracts without following the required rule-making process.
The exchange also argues that the decision has caused direct competitive harm by allowing Kalshi to rapidly expand its offering of perpetual futures, which have already generated trading volumes exceeding $1bn. CME currently offers conventional futures contracts tied to Bitcoin and other digital assets.
Duffy, who is due to step down as chief executive next year, said the exchange had been preparing the legal challenge for several months and was ready to contest the regulator’s decision in court.
