CME argues that criminals harm its products in the long term. The lawsuit alleges that the CFTC failed to consider the ramifications of pers’ approval and that these products are in fact “swaps” as defined by the Dodd-Frank Act, not “futures.”
Each term has implications for how the products themselves should be regulated and what requirements are placed on the companies that issue them. CME CEO Terrence Duffy, who recently announced he would step down next year, told CNBC last week that the distinction imposes different rules for participants.
“The CFTC failed to conduct its own analysis to determine whether its approval of Kalshi’s perpetual Bitcoin as a future complies with the law,” CME’s lawsuit states. “The CFTC did not even mention the relevant Dodd-Frank provision defining ‘swap’. Indeed, the word ‘swap’ does not appear anywhere in the Order.”
Instead, the CFTC simply “approved Kalshi’s application,” according to the lawsuit.
What is interesting is that the current number of companies obtaining Designated Contract Market (DCM) approvals and turning to pers is growing quite rapidly. On the same day the CFTC granted Kalshi’s request, it sent a no-action letter to Coinbase, seemingly opening the door for that exchange to also list the criminals — albeit through an offshore intermediary.
