CME Chief Argues Crypto Perps Are Swaps as Exchange Battles CFTC in Court

Terry Duffy, CEO of CME Group, argues that cryptocurrency perpetual futures — commonly called perps — should be classified as swaps, a designation that would subject them to tighter regulations introduced after the 2008 financial crisis.

Duffy's exchange has already taken legal action against the Commodity Futures Trading Commission (CFTC) to secure that classification, despite the regulator's assertion that CME could list identical contracts on its own platform.

Why Does Duffy Say Perps Are Swaps?

The CFTC has taken a different stance, having approved a Bitcoin (BTC) perpetual futures contract from prediction market platform Kalshi as a futures product on May 29.

Perps are contracts that never expire, allowing traders to maintain leveraged positions indefinitely. Duffy's argument centers on the funding rate — payments exchanged between long and short positions to keep the contract aligned with spot prices.

“And that is the definition of a swap.”

Terry Duffy, CME Group CEO, in an interview following the exchange's record third-quarter revenue.

Is a Retail Product Worth a Lawsuit for an Institutional Exchange?

Duffy noted that perps are predominantly retail instruments, falling outside CME's primary client base. During a July call, he stated that institutional traders accounted for 94% of first-half volume and that clients had not requested perps.

CME's June 18 complaint alleges that Kalshi's perps are aimed at retail investors who also trade CME's products.

Meanwhile, the CFTC's September 2 motion to dismiss argues that CME lacks legal standing to sue because it could list perps itself.

What Is at Stake for US Traders if a Court Picks a Label?

Law firm Cahill notes that futures classification affects how customer collateral is protected and supports futures-based tax treatment, though tax questions remain unresolved.

Duffy warned that some offshore perps offer up to 250x leverage and said he has seen no rulemaking to limit it. He dismissed entrants' pledges to cap leverage as meaningless without enforceable rules.

In contrast, Kalshi CEO Tarek Mansour stated that its perps offer roughly six times leverage, comparable to traditional futures.

No ruling has been issued so far. A dismissal on standing grounds could end the case without determining whether a perp is a future or a swap, leaving a market that any registered exchange can now list under a classification no court has resolved.