TD Cowen: CME likely to prevail in suit over crypto perps

CME Group sued the U.S. Commodity Futures Trading Commission last Thursday after the agency approved perpetual futures, or perps, for Kalshi and for Coinbase’s U.S. customers via an affiliate. Investment bank TD Cowen says CME has the stronger legal case on both procedural and substantive grounds.

CME’s central claim is based on the Commodity Exchange Act, which the exchange interprets to require a futures contract to provide for delivery, or an economic equivalent, at a set time in the future. Perpetual futures do not expire, and CME argues those products therefore meet the statutory definition of swaps rather than futures. The exchange asked the court to vacate the CFTC approvals and declare similar perpetual contracts subject to swap regulations.

Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, wrote that CME “has the upper hand in the litigation” and added the exchange is likely to request a preliminary injunction to pause the CFTC approvals while the case proceeds. A preliminary injunction would temporarily halt the CFTC’s approvals during litigation.

TD Cowen outlined the practical differences between swaps and futures that underlie the dispute. Swap dealers must register with regulators and follow a five-day margin schedule, while futures contracts typically use a one-day margin requirement. Tax treatment for swaps and futures also differs under current law.

TD Cowen also highlighted Administrative Procedure Act arguments. The CFTC previously treated perpetual contracts as swaps and opened a public comment period on the issue in April 2025. The agency later approved Kalshi’s bitcoin perpetual futures in a single day without issuing a formal rule, which CME contends reflects inadequate explanation and decision-making under the APA.

The CFTC responded to the lawsuit by calling the legal action “lawfare against the agency and the Trump Administration’s pro-innovation agenda” and said it will address the claims and seek to dismiss the complaint as frivolous. A Kalshi spokesperson commented, “This isn’t about the law, it’s about the fear of competition.” Coinbase has backed the CFTC’s approach, arguing that competition and innovation benefit U.S. markets.

After the filing, the CFTC and the Securities and Exchange Commission jointly requested public feedback on updating and clarifying derivatives rules. The request for comment asks about definitions of “swaps” and “security-based swaps,” the scope of existing exemptions, and how newer products such as prediction-market event contracts and perpetual futures should be treated.

TD Cowen expects a status conference and a litigation schedule to be set soon, and identified the injunction request and the court’s timeline as the developments to watch as the case moves forward.