CFTC and SEC initiate review of rules for crypto derivatives amid legal conflict with CME
The U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) are launching public consultations to clarify the definitions of swaps and other derivative instruments. This step aims to adapt the regulatory framework to the rapidly changing landscape of financial products, including contracts on prediction markets and perpetual futures.
The regulators' initiative unfolds amid a sharp confrontation with the Chicago Mercantile Exchange (CME Group). On June 17, CME CEO Terrence Duffy announced plans to sue the CFTC. The reason was the agency's approval for the Kalshi platform to launch perpetual futures. According to CME, this move undermines the established order in the derivatives market.
Eliminating Uncertainty in the Dodd-Frank Act
CFTC Chairman Michael Selig emphasized that a review of the rules is necessary to eliminate uncertainty in the Dodd-Frank Act, which, he said, hinders fair competition. His SEC counterpart Paul Atkins added that clarifying rules for event contracts is long overdue, given the growing popularity of such instruments. The collection of feedback from market participants will last 60 days.
A CFTC representative, in a comment to industry publications, called the CME lawsuit "unfounded" and accused the exchange of trying to block progress through litigation. According to him, dominant players are simply afraid of competition on equal terms. Representatives of the decentralized exchange Hyperliquid joined the criticism, stating that CME controls about 92% of the U.S. derivatives market and is trying to maintain its monopoly.
"Americans have been going offshore for years to trade perpetual futures. This is the first truly new product on the U.S. regulated market in a decade. Competition benefits users, and innovation deserves clear rules," the organization noted.
Recall that in May, the CFTC acknowledged its lawsuit against Gemini as erroneous, calling the methods of the previous leadership "inappropriate." This precedent demonstrates a shift in the regulator's approach to enforcement actions.
Expert opinion: The CME lawsuit against the CFTC is a classic attempt to protect an established monopoly, not a concern for the market. Perpetual futures have long become mainstream offshore, and their legalization in the U.S. is only a matter of time. The review of CFTC and SEC rules is a necessary step to attract innovation and liquidity back to the U.S. jurisdiction. However, the 60-day consultation period may drag on, and the market will be waiting for clear signals from regulators.