The U.S. Commodity Futures Trading Commission (CFTC) has asked a federal judge to throw out CME Group's lawsuit challenging the agency's approval of cryptocurrency perpetual futures.

The motion was filed on Wednesday in the U.S. District Court for the District of Columbia. In it, the CFTC argues that CME has failed to demonstrate a sufficient competitive injury, which the agency says is necessary to establish legal standing. Standing is a threshold requirement in federal court: a plaintiff generally must show a concrete, actual or imminent injury that is fairly traceable to the defendant's conduct, and courts routinely dismiss cases where that showing falls short.

At the heart of the dispute is Kalshi's Bitcoin perpetual futures contract, which the CFTC approved in May. The agency has also stated that other registered futures exchanges are free to list similar digital commodity perpetual contracts.

CME has pushed back against that approach. The exchange contends that cryptocurrency perpetual contracts should be classified as swaps under the Commodity Exchange Act and the Dodd-Frank Act. That classification matters because swaps and futures are subject to different regulatory regimes under the post-2010 Dodd-Frank framework, with distinct rules on trading venues, clearing, and market participants. CME further claims the CFTC improperly altered its regulatory treatment of these products.

Why the CFTC wants the case dismissed

The regulator notes that CME remains free to list its own perpetual futures products. On that basis, the CFTC argues that CME cannot claim harm merely because Kalshi received approval to offer competing products.

The agency also cited CME's own trading data, pointing out that Bitcoin and Ether futures volumes rose in June and August compared with May, the month the CFTC issued its approval.

As a result, the CFTC characterized CME's alleged competitive injury as self-inflicted, saying the exchange chose not to offer perpetual futures even though it had the ability to do so.

The regulator added that reclassifying the contracts as swaps would not resolve CME's concerns anyway, since other designated contract markets could still offer similar products under that classification.

The legal fight could shape U.S. crypto derivatives

The dispute carries broader implications for the U.S. cryptocurrency derivatives market. Perpetual contracts have become a major trading product worldwide because they have no fixed expiration date and rely on funding mechanisms to keep their prices aligned with spot markets. They have historically been traded largely on offshore, lightly regulated venues, which is part of why U.S. regulators and exchanges are now contending over how — and whether — to bring the product structure into domestic regulated markets.

The CFTC has sought to bring more perpetual-style products into regulated U.S. markets. Its May policy established a framework for certain digital commodity perpetual futures, and subsequent regulatory guidance addressed how these products should be treated.

CME faces an Oct. 2 deadline to respond to the dismissal motion. The outcome of the case could determine how regulators and exchanges classify — and compete over — the growing U.S. crypto perpetual futures market. Beyond the Oct. 2 filing, the next steps to watch are the court's ruling on standing and, if the case proceeds, arguments over the statutory classification of perpetual contracts.