The legal battle between CME Group and the Commodity Futures Trading Commission (CFTC) over cryptocurrency perpetual futures has taken another turn, with the Hyperliquid Policy Center (HPC) stepping in to challenge CME’s arguments.
The policy group, which is associated with the Hyperliquid ecosystem, has submitted an amicus brief supporting the CFTC and urging a federal court to dismiss CME’s lawsuit. HPC argues that CME’s case suffers from two major legal weaknesses: the exchange has failed to prove a valid competitive injury, and its concerns do not fall within the protections of the Commodity Exchange Act (CEA).
The dispute centers around the CFTC’s approval of Kalshi’s Bitcoin perpetual futures contract and the regulator’s broader approach toward allowing regulated exchanges to offer similar products.
HPC Questions CME’s Legal Standing
One of HPC’s primary arguments focuses on whether CME has the legal right to bring the lawsuit.
To challenge a government decision in federal court, a plaintiff generally must show that it has suffered a direct and recognizable injury. CME has relied on the concept of competitor standing, arguing that the CFTC’s approval of Kalshi’s Bitcoin perpetual futures contract creates an unfair advantage for competitors.
However, HPC disagrees with this argument.
According to the policy group, the CFTC’s decision does not prevent CME from launching similar products. Instead, the regulatory approach allows any registered U.S. futures exchange to submit comparable perpetual futures contracts for approval if they comply with existing rules.
HPC argues that CME’s competitive concerns come from its own business decision not to pursue a similar product rather than from any unfair regulatory advantage created by the CFTC.
The regulator has made a similar argument in its own request to dismiss the lawsuit, describing CME’s claimed disadvantage as a result of its own choice. The CFTC has also pointed to CME’s recent Bitcoin and Ether futures trading volumes, stating that the exchange has not demonstrated a measurable decline caused by Kalshi’s approval.
Second Challenge: CME May Not Be Protected Under the CEA
HPC’s second argument focuses on the “zone of interests” test, a legal principle that determines whether a party’s concerns are connected to the purpose of the law they are using.
The group claims that CME is using sections of the Commodity Exchange Act to protect its commercial position rather than to address the regulatory issues the law was designed to handle.
HPC argues that the CEA is intended to regulate derivatives markets and protect market integrity, not to prevent competition between exchanges.
The CFTC has raised a similar point, stating that the law does not provide protection for an established exchange against lawful competition from other regulated platforms.
If the court agrees with these arguments, the lawsuit could be dismissed without reaching the larger question of whether perpetual futures should legally be classified as futures or swaps.
CME’s Dispute Over Perpetual Futures Classification
CME’s lawsuit, filed in the U.S. District Court for the District of Columbia, challenges the CFTC’s approval of Kalshi’s Bitcoin perpetual futures contract.
The exchange argues that perpetual contracts should be treated as swaps under the Dodd-Frank Act because they do not have a fixed expiration date. CME claims that the CFTC created a new regulatory approach without going through the formal rulemaking process required by law.
Perpetual futures are different from traditional futures because they do not expire. Instead, funding payments between buyers and sellers help keep the contract price aligned with the underlying asset.
The CFTC disagrees with CME’s interpretation and says the Commodity Exchange Act does not require futures contracts to have a specific expiration date. The regulator stated that Kalshi’s product was reviewed under existing approval procedures and met the necessary requirements.
Growing Competition in the U.S. Crypto Derivatives Market
The outcome of this lawsuit could have major implications for the future of regulated cryptocurrency derivatives in the United States.
For years, perpetual contracts have mainly been available through offshore crypto platforms. However, recent regulatory developments have opened the possibility for U.S.-based exchanges to offer similar products under CFTC oversight.
Kalshi has continued expanding its crypto derivatives offerings, including plans for additional perpetual contracts. Meanwhile, Hyperliquid has remained one of the largest decentralized perpetual trading platforms, although direct access from U.S. users remains restricted.
Reports have also suggested that Hyperliquid-linked products could eventually reach U.S. traders through regulated infrastructure partnerships rather than direct access to the decentralized platform.
What Happens Next in the CME vs CFTC Case?
The lawsuit is now moving into the next stage of legal proceedings.
The CFTC has already requested dismissal of the case, and CME is expected to respond before the court decides whether the lawsuit will continue.
The court’s decision could determine how regulators classify perpetual futures and whether traditional financial exchanges can challenge new crypto derivatives products based on competitive concerns.
For the broader crypto industry, the case represents a key test of how digital asset derivatives will fit into the existing U.S. financial regulatory framework.
