CFTC Defends Dismissal Bid in CME's Kalshi Bitcoin Contract Case

The Commodity Futures Trading Commission is defending its approval of a Bitcoin (BTC) perpetual futures contract as Chicago Mercantile Exchange Inc. challenges whether the product should be regulated as a swap.

The CFTC filed a motion to dismiss the case on Sept. 2 and submitted a reply supporting that motion on Oct. 16. The agency argues that CME has not alleged a sufficient competitive injury to bring the challenge. That is the CFTC's legal position, not a court finding.

In its reply, the CFTC argued that CME's crypto futures volume rose after the approval. The CFTC also cited CME's statement that it had not heard customer demand for perpetual futures, arguing that this sits uneasily with CME's claim that the contracts pose a competitive threat.

Chicago Mercantile Exchange Inc., a CME Group subsidiary, sued after the CFTC approved Kalshi's Bitcoin perpetual futures contract. Chicago Mercantile Exchange Inc. argues that a contract without a fixed expiration date should be treated as a swap and follow a different regulatory process.

BTCPERP has no fixed expiration date. It uses periodic payments between long and short positions intended to keep its price near Bitcoin's spot price. The court has not ruled on the CFTC's request to dismiss the case or on how the contract should be classified.