US regulators target derivatives definitions: CME lawsuit against CFTC accelerates the process
U.S. regulators — the CFTC and SEC — are launching a public comment procedure aimed at reviewing and clarifying definitions for a range of derivative products. This step, initiated amid the CME Group's lawsuit against the CFTC, could significantly reshape the regulatory landscape for derivatives in the United States.
What exactly do they want to clarify?
The joint request from the CFTC and SEC concerns fundamental concepts such as "swap" and "security-based swap," as well as what exactly does not fall under these categories. Particular attention is paid to new products that have long been in a "gray area": event contracts on prediction markets and perpetual futures (perpetual contracts).
CFTC Chairman Michael Selig emphasized that existing ambiguities in Title VII of the Dodd-Frank Act hinder fair competition and responsible innovation. His SEC counterpart, Paul Atkins, characterized the need for clarifications as "long overdue." In my opinion, this signals that regulators have realized that the previous framework, created after the 2008 crisis, is not keeping pace with market evolution, especially regarding cryptocurrency and event derivatives.
The essence of the dispute between CME and CFTC
The catalyst for the process was a lawsuit filed by CME Group against the CFTC. The reason is the regulator's decision to allow the Kalshi platform to trade perpetual futures (perps), classifying them as futures contracts rather than swaps.
CME argues that CFTC Chairman Michael Selig, by approving such products for Kalshi and other platforms, ignored the existing definition of a "swap" and bypassed the established regulatory procedure. According to the exchange, perpetual contracts should be regulated specifically as swaps. In effect, CME sees this as creating unequal competitive conditions: new players gain access to retail clients through a lighter futures regime, while CME operates under stricter rules. The CFTC, in turn, is seeking to dismiss the case, arguing that the lawsuit contradicts the Trump administration's policy of supporting innovation.
My analysis: This dispute goes far beyond a simple definition. It reveals a fundamental conflict between established exchanges that have operated under old rules for decades and new, tech-driven platforms seeking flexibility. The outcome of this case and the subsequent clarification of the regulatory framework will determine who controls the derivatives market of the future — and whether the crypto industry will have a seat at that table.