CFTC vs CME: Perpetual Futures Classification Sparks High-Stakes Legal Battle

The US crypto market is on the cusp of significant change as a high-stakes legal battle unfolds between the CFTC and CME Group. The outcome will not only settle a disagreement between companies but also determine how much risk and what kind of products are available to retail investors.

The dispute centers around 'perpetual futures,' which are contracts with no expiration date, using funding rates to keep prices tied to the underlying spot market. CME argues that these perpetuals are swaps, not futures, under Dodd-Frank.

The classification decides which rulebook governs US crypto perps. The CFTC and SEC jointly requested public comment on derivatives definitions, citing a regulatory-lag problem, as much of today's crypto market was never imagined when Dodd-Frank was written.