- CME Group will sue the CFTC over its late-May approval of crypto perpetual futures for U.S. traders, outgoing CEO Terry Duffy confirmed on June 17.
- Duffy argues that perpetual futures are legally swaps, not futures, under the Dodd-Frank Act, which would impose stricter regulatory requirements.
- The lawsuit marks a dramatic escalation in the fight to bring a popular but leveraged crypto product onto regulated domestic exchanges.
- CFTC Chair Michael Selig has defended the approvals as a move to bring liquidity onshore, while the agency calls the planned lawsuit “frivolous.”
In a dramatic move on June 17, CME Group CEO Terry Duffy announced his firm will sue the Commodity Futures Trading Commission over its decision to approve crypto perpetual futures for American investors. This legal battle, confirmed to CNBC, challenges a landmark regulatory shift that occurred in late May.
The CFTC cleared Kalshi and Coinbase to offer these high-leverage derivatives, marking the first time U.S. traders could access perps on regulated domestic platforms. Consequently, this opened a lucrative market long dominated by offshore venues to new competition.
However, Duffy contends the product is misclassified. He argues perpetual futures are swaps under the Dodd-Frank Act because they involve two parties exchanging payments. “Under the Dodd-Frank Act, it clearly defines what a swap is and what a future is”, he told CNBC, which would subject them to different rules.
Meanwhile, CFTC Chair Michael Selig has defended the decision as a way to bring a core crypto market onshore. A spokesperson told Reuters the agency looks forward to dismissing the “frivolous” lawsuit.
Duffy has been scathing about the risks, earlier likening the situation to the 2008 financial crisis buildup. He said he spent eight months preparing the challenge, stating, “I’m always up for a good battle.”
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