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Terrence Duffy, who is stepping down as CME Group's chief executive, has told CNBC that the company is suing the Commodity Futures Trading Commission (CFTC), with the filing scheduled to be submitted this week.
CME Group (Chicago Mercantile Exchange Group) is the world's largest derivatives exchange operator, while the CFTC is the U.S. regulator that oversees futures and derivatives markets.
Duffy had reportedly been weighing the move for roughly eight months before making it public.
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The target is a decision the CFTC made in late May, when it cleared prediction market platform Kalshi to list a Bitcoin perpetual futures contract.
Kalshi is a U.S.-based prediction market that allows users to trade on the outcomes of real-world events, from financial markets to political results.
It was a first for the United States. For Duffy, it was also a mistake, and not just a procedural one.
A classification fight, not a crypto fight
Duffy's case does not hinge on whether perpetual futures are risky or whether retail investors should be trading them, though he has raised both concerns separately. The lawsuit rests on something more technical: what the product legally is.
His argument is that perpetual futures, contracts with no expiration date that let traders bet on price movement without holding the underlying asset, meet the Dodd-Frank Act's definition of a swap, not a future.
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The Dodd-Frank Act is a 2010 U.S. financial reform law passed in the wake of the 2008 financial crisis, which established strict rules around how derivatives and swaps must be traded, reported, and cleared.
That distinction matters. Swaps carry different clearing, reporting, and trading-venue obligations.
Simply put, a swap is a financial contract in which two parties agree to exchange cash flows based on a set of agreed conditions. And by calling them futures, Duffy argues, the CFTC sidestepped a set of rules that should have applied from the start.
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He told CNBC that he believed the agency was, to some extent, misrepresenting the facts. That is not language derivatives executives typically use about their own regulator.
“I’ve never shied away from one, and I won’t shy away from this. I’m prepared, and I will be prepared to go through this. And that’s why I wanted to announce on your show that we will be filing this litigation tomorrow, because we are not taking this lightly,” Duffy said during the interview.
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'Prepared to go through this'
CME has spent years building exclusive licensing arrangements with benchmark providers.
Duffy pointed out that any perpetual product referencing those benchmarks would have to route through CME regardless of how it gets classified, giving him both a legal and commercial stake in the outcome.
The CFTC was not rattled, at least publicly. A spokesperson called the lawsuit frivolous and said the agency looked forward to responding to the claims in court.
CFTC chair Michael Selig had already defended the perpetual futures approval earlier in the week, arguing it was time the U.S. had regulated products of this kind.
Duffy, for his part, sounded like someone who had thought this through carefully and was not looking for a way out.
He steps down as CEO in March 2027. Lynne Fitzpatrick, currently President and CFO, takes over becoming the first woman to lead CME Group.
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