Crypto news

CME Group, the world's largest derivatives exchange, intends to file a lawsuit against the U.S. Commodity Futures Trading Commission (CFTC). Exchange CEO Terrence Duffy stated that the regulator's decision to allow the Kalshi platform to launch perpetual futures is legally flawed and violates existing legislation.

CME's main argument is that perpetual futures are essentially swaps. Under the Dodd-Frank Act, such instruments are subject to different regulations than standard futures contracts. Duffy emphasized that his company holds exclusive licenses for all key market benchmarks, and therefore any derivative products based on them must go through CME's trading systems.

According to Duffy, preparations for the lawsuit have been underway for the past eight months. He is determined and ready for a lengthy legal battle, calling it a "good fight" from which he does not intend to back down. The exchange head criticized the CFTC for hastily approving the new product, pointing out the risks associated with the high leverage characteristic of perpetual futures.

"I am seriously concerned about the structure of these contracts. I don't want people to lose money on products they don't understand," Duffy emphasized.

He drew a parallel between the current situation and the housing market before the 2008 crisis, calling excessive speculation a "coming disaster." Duffy confirmed that CME will defend its position in court at any cost.

Recall that earlier broker Interactive Brokers launched a platform combining offerings from Kalshi, CME Group, and its own ForecastEx service for trading event outcome contracts. This further complicates the regulatory landscape.

As an analyst, I believe this conflict is just the tip of the iceberg. The regulatory uncertainty surrounding perpetual futures and other hybrid instruments has long been overdue. If CME wins the case, it could set a precedent that may slow innovation in the prediction market, but simultaneously protect retail investors from uncontrolled risks.