US CFTC rebuts CME's standing to sue, says it failed to reasonably explain financial harm from perpetual contract policy.

BlockBeats news, October 20 - The U.S. Commodity Futures Trading Commission (CFTC) stated in its latest court filing that CME merely claims increased competition but fails to reasonably demonstrate imminent financial harm, which is insufficient to establish standing to challenge its perpetual contract policy. The CFTC pointed out that after the policy adjustment, CME's crypto futures trading volume actually increased.

The CFTC approved Kalshi's first Bitcoin perpetual contract in May this year and stated it would regulate such products on a case-by-case basis as futures. CME argues that perpetual contracts have no expiration date and should be classified as swaps rather than futures, subject to a different regulatory framework. The CFTC requested a federal judge to dismiss the case last month, and this filing further elaborates its rebuttal to CME's standing.

The CFTC also noted that CME had told investors it had not heard client demand for perpetual contracts and that such products cannot replace its existing futures, and should not take different positions in court and on earnings calls.

TD Cowen policy analyst Jaret Seiberg believes CME may still have the upper hand on standing and the argument that the product should be classified as a swap. However, he is concerned that if the perpetual contract market continues to grow during the litigation, should CME win, subsequently unwinding this market could become more complicated.