The CFTC and SEC are reviewing rules for crypto derivatives: a new round of market competition.
Two key U.S. regulators — the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) — have announced a joint request for public comment on the definitions of swaps and other derivative instruments. This step aims to adapt the regulatory framework to the rapidly changing structure of the crypto derivatives market.
The initiative coincides with an escalating conflict between the CFTC and the Chicago Mercantile Exchange (CME Group). On June 17, CME CEO Terrence Duffy stated his intention to file a lawsuit against the CFTC after the agency allowed the Kalshi platform to launch perpetual futures. Regulators intend to clarify rules for new financial products, including contracts on prediction markets and perpetual futures, to determine whether current regulations align with modern realities.
Details of the Initiative
CFTC Chairman Michael Selig emphasized that this step will help 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. The comment collection period will last 60 days, giving market participants the opportunity to submit their proposals.
A CFTC representative, commenting on the CME lawsuit, called it "unfounded" and accused the exchange of trying to fight progress through the courts. According to him, dominant players are simply afraid of competition on a level playing field. Representatives of the decentralized exchange Hyperliquid also joined the criticism. The Hyperliquid Policy Center stated that CME controls about 92% of the U.S. derivatives market and is attempting to maintain its monopoly.
"Americans have been going offshore for years to trade perpetual futures. This is the first truly new product on the regulated U.S. 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 was mistaken, stating that the methods of the agency's previous leadership were "improper." This precedent underscores the growing willingness of regulators to reconsider their approaches.
My analysis: This move by the CFTC and SEC is not just a bureaucratic formality but a signal that U.S. regulators have realized the crypto derivatives market has outgrown old laws. With the CME trying to block innovation through the courts and offshore platforms attracting billions of dollars, a rule revision becomes inevitable. However, the key question is whether regulators can strike a balance between investor protection and fostering competition, or whether the process will drag on for years, leaving the market in limbo.