The Commodity Futures Trading Commission is moving to dismiss CME's lawsuit challenging the agency's approval of Kalshi's Bitcoin perpetual futures contracts, according to a September 2 filing.
In its motion, the CFTC argued that CME lacks legal standing to challenge the decision and has not presented a viable legal claim. The agency said CME has not identified any restriction preventing it from offering the same type of perpetual futures contracts, characterizing the lawsuit as an attempt to challenge the CFTC's regulatory classification rather than addressing genuine competitive injury.
The CFTC defended its decision to classify the products as futures rather than swaps, stating that "perpetual futures are futures." The agency noted that CME's core objection is not that the CFTC lacks authority to approve the contracts, but that CME disagrees with how the products were legally classified. The CFTC added that CME has failed to demonstrate concrete harm from Kalshi's contracts.
CME Group filed the lawsuit over the regulator's decision to allow Kalshi to offer Bitcoin perpetual futures, setting up a dispute over whether prediction markets can expand into products traditionally offered by derivatives exchanges. Perpetual contracts allow traders to maintain leveraged positions on crypto prices indefinitely, as they have no expiration date.
CME argued in its suit that the CFTC's approval violated the Commodity Exchange Act and Dodd-Frank by allowing Kalshi to offer a product that does not meet the traditional characteristics of a futures contract. The exchange also said the agency's decision was issued without public comment or reasoned decision-making and has caused competitive injury by allowing Kalshi to compete for customers in the crypto derivatives market. Kalshi has since launched numerous crypto perpetuals.
The CFTC rejected CME's challenge, while Kalshi stated that CME is simply concerned about competition.
