The Bitcoin Beacon
The regulator called the exchange's challenge much ado about nothing, defending the first U.S.-approved bitcoin perpetual as the offshore version dies.
WASHINGTON — The perpetual swap — a no-expiry futures contract that is bitcoin’s most-traded instrument — spent a decade as the preserve of offshore exchanges. Now it is being pulled onshore, and the U.S. derivatives regulator just moved to clear the last obstacle in its way. On September 2 the Commodity Futures Trading Commission asked a federal court to throw out CME Group’s lawsuit challenging the agency’s approval of a bitcoin perpetual, calling the case “much ado about nothing.”
On May 29 the CFTC approved KalshiEX’s cash-settled bitcoin perpetual futures contract and issued a policy statement inviting other registered exchanges to list similar products as futures. CME — the largest U.S. futures venue and the incumbent in regulated bitcoin derivatives — sued the agency on June 18. Its argument: perpetuals should be classified as swaps under the Commodity Exchange Act and Dodd-Frank, and the CFTC bent the rules to wave Kalshi’s product through as a future.
The complaint was blunt about the stake. By letting Kalshi and others “enter the derivatives marketplace by listing similar cryptocurrency perpetuals as futures,” CME said, the CFTC “ushered new entrants into CME’s retail futures market” to compete for its customers.
The CFTC’s motion is a study in turning a rival’s argument against it. CME has no standing to claim competitive injury, the agency wrote, because CME is free to list the exact same perpetual futures itself — and has publicly said its own customers are not asking for them. The agency noted CME’s bitcoin and ether futures volumes were higher in June and August than in May, when the contested order issued. “Even if CME’s vague assertions of competitive injury had any substance, those injuries are entirely self-inflicted and based on CME’s refusal to list perpetual futures for trading.”
It went further: even if the commission reclassified perpetuals as swaps, CME would not recover, because Kalshi and other exchanges would simply relist them under that label. The agency invoked the Commodity Exchange Act’s design around “responsible innovation and fair competition,” arguing CME’s suit to stifle a competitor “turns that purpose on its head.”
A contract that made and broke fortunes on unregulated exchanges is being rebuilt inside the American rulebook.
Strip out the legal fencing and a market shift shows through. For years, if you wanted to trade a bitcoin perpetual you went to an offshore exchange — the venue class that popularised the instrument and, at its extremes, set bitcoin’s price through cascading liquidations. That world is receding: BitMEX, the exchange that invented the bitcoin perpetual, is winding down this month. In its place, U.S.-regulated venues — Kalshi, and others the CFTC has cleared such as Coinbase and Bitnomial — are listing perpetuals under federal oversight, with segregated funds and disclosure rules the offshore originals never had.
The lawsuit is a turf fight over who gets to sell that product. CME wants the newcomers reclassified into a heavier regulatory bucket; the CFTC wants the door left open. The near-term outcome is procedural — the agency asked for an oral hearing, CME’s opposition is due October 2, and Judge Colleen Kollar-Kotelly will decide whether the case proceeds. The direction of travel is not. Bitcoin’s signature speculative instrument is moving from the margins of the system into its center.
Why it matters: the perpetual is how most of the world trades bitcoin, and Washington is deciding it belongs onshore under American rules rather than offshore beyond them.
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