CFTC's Approval Sparks Turf War Between Exchanges

The Commodity Futures Trading Commission (CFTC) has opened up new opportunities for cryptocurrency derivatives trading. In June, it approved perpetual futures on cryptocurrencies at Kalshi and allowed Coinbase's US customers to access its offshore 'perps'.

This move has already had a significant impact, with prediction market Kalshi Inc.'s crypto perps clearing $8.5 billion in volume within weeks. The incumbent exchanges have taken notice, with CME Group Inc.'s shares falling 19% and Cboe Global Markets Inc.'s dropping 27%. CME has even sued the CFTC, claiming that the approval caused 'textbook competitive injury'.

The trade press is labeling this a turf war between exchanges. However, the public debate over whether perps are dangerous is focused on the wrong questions and misses the most important one.