CME escalates vs the CFTC
CME Group plans to sue the U.S. Commodity Futures Trading Commission over its approval of Kalshi’s perpetual futures earlier this month, CEO Terrence Duffy told CNBC on Wednesday.
Duffy’s point is blunt. He says the CFTC treated Kalshi’s product as a futures contract when the structure fits Dodd-Frank’s definition of a swap.
“Under the Dodd-Frank Act, it clearly defines what a swap is and what a future is,” Duffy argued, contending that when “two parties” exchange payments, the deal is a swap and should face swap requirements, not futures rules.
CME’s legal threat matters because CME is the largest U.S. derivatives exchange. If its complaint sticks, it challenges the CFTC’s recent approach to regulating crypto-style perps and similar contracts in the U.S.
“Rules of the road” before CME lists perps
Duffy also framed the lawsuit as a credibility issue and a timing issue for CME. He said CME would need to “understand ‘the rules of the road’” before listing perpetual contracts of its own.
He further claimed the agency may have misrepresented facts in how it described perpetual 24/7 trading. Duffy pointed to a CFTC release on 24/7 trading that he said was described as a rule when it was not.
CME’s stance also signals internal caution. Even if CME wants to compete in the perpetuals market, Duffy appears to be saying the CFTC’s current theory of classification could leave CME exposed if regulators or courts disagree later.
Michigan judge narrows CFTC jurisdiction over sports prediction markets
The same day CME telegraphed its lawsuit, a U.S. District Court judge in the Western District of Michigan dealt the CFTC a separate setback.
Judge Paul L. Maloney denied Polymarket’s request for a preliminary injunction against Michigan regulators. He ruled that sports-related prediction-market wagers are not swaps and therefore fall outside CFTC jurisdiction.
Maloney’s reasoning goes beyond a quick classification. He wrote that the agency’s view of derivatives was “so vast that it would encompass vast swaths of activity never understood to be associated with the financial industry” and traditionally left to the states.
so vast that it would encompass vast swaths of activity never understood to be associated with the financial industry
That’s a sharp limit on the CFTC’s reach. If sports prediction markets are outside the CFTC’s swap authority, then efforts to extend the agency’s perimeter using Dodd-Frank’s derivatives language hit a brick wall in at least one federal district.
What the two fights do to the CFTC’s expansion
Unchained notes that these developments cut at the foundation of the CFTC’s recent expansion under the Trump administration. The CFTC has leaned on the Dodd-Frank Act to claim authority over both crypto perpetuals and prediction markets.
That push has helped create approvals for U.S. perps with approvals at Kalshi and Coinbase, and it has also fed lawsuits against several states that tried to restrict them.
Now, with Sixth Circuit courts split on the issue, the uncertainty is moving upward. Unchained reports that two Sixth Circuit decisions sided with states and one sided with prediction markets.
The appeals court is set to take up the question next month. If the Sixth Circuit keeps its internal disagreement, the Supreme Court is described as the likely final arbiter.
The near-term clock: appeals drive the next decision
This is not just a policy fight. It is a jurisdiction fight, and jurisdiction determines who can regulate, enforce, and approve.
Here are the core moving pieces from Unchained’s report.
| Topic | What happened | Who | Why it matters |
|---|---|---|---|
| Perpetual futures approval dispute | CME plans to sue the CFTC over its approval of Kalshi’s perpetual futures | CME vs CFTC | Challenges the CFTC’s product classification under Dodd-Frank |
| Alleged misclassification | Duffy argues the product should be treated as a swap, not a future | Terrence Duffy | Could force courts to define the boundary more tightly |
| Prediction market jurisdiction | Michigan judge denied Polymarket’s injunction | Judge Paul L. Maloney | Sports prediction wagers ruled not swaps, outside CFTC jurisdiction |
| Reasoning on scope | Judge criticized the CFTC view as so broad it covers activity not tied to finance | Maloney | Raises limits on agency overreach into state-regulated markets |
| Appellate next step | Sixth Circuit split, appeals set next month, Supreme Court possible | Sixth Circuit and beyond | Likely final answer on CFTC authority |
If you trade in the shadows of this legal regime, the immediate consequence is simple. The “approved” label from regulators may not stay stable once classification theories land in court.
For companies, the practical consequence is harder. They may have to price not just product risk, but regulatory theory risk.
What to watch next
Unchained frames the bigger picture as a tug-of-war over who controls derivative-like contracts. The CME lawsuit targets the CFTC’s approach to perpetual futures approval. The Michigan ruling targets the CFTC’s attempt to treat sports prediction wagers as swaps.
With Sixth Circuit courts split and an appellate hearing scheduled next month, the next months could determine whether the CFTC’s Dodd-Frank theory becomes the new baseline or gets carved down.
And if the Supreme Court steps in, the definition of “swap” versus “future” could end up doing more work than any press release from any agency.