"CME cannot have it one way with the court and another way with the investing public": the CFTC asks a judge to throw out the exchange's lawsuit over bitcoin perpetual futures

The regulator that approved Kalshi's bitcoin perpetual contract in May is telling a court that the exchange suing over it has no case. In a brief filed on Friday, reported by CoinDesk on Monday, the Commodity Futures Trading Commission asked the judge hearing CME Group's lawsuit to dismiss it for lack of standing, saying CME has not shown it is being harmed by the agency's decision to regulate perpetual contracts as futures.

The fight began after the CFTC approved Kalshi's bitcoin perpetual contract in May and said in a Federal Register notice in June, linked by CoinDesk, that it would treat such contracts as futures, case by case. CME sued in June, arguing that a perpetual has no expiry and is therefore a swap under the Commodity Exchange Act, which would put it under a different rulebook for margin, registration and tax. The CFTC first asked for dismissal in September; Friday's brief presses the standing point.

The agency's argument is pointed. It says volume in CME's own crypto futures has grown since the policy, and that CME chairman Terence Duffy told investors in July that clients saw little demand for perpetuals, so CME cannot claim imminent competitive injury in court while saying the opposite on earnings calls. CME did not immediately comment, CoinDesk reported.

Jaret Seiberg of TD Cowen wrote to clients on Monday that CME may still hold the stronger position on both standing and the swaps question, but that the longer the litigation runs while perpetuals grow, the harder any unwinding would become if CME prevails. Neither report gives a timetable for a ruling.