Hyperliquid policy group cites 2 flaws in CME lawsuit

The Hyperliquid Policy Center has asked a federal court to dismiss CME Group’s lawsuit against the CFTC, arguing that the derivatives exchange lacks standing and cannot rely on the Commodity Exchange Act provisions cited in its complaint.

Hyperliquid policy group disputes CME’s standing

The Hyperliquid Policy Center said in a Tuesday X announcement that it had submitted an amicus brief supporting the Commodity Futures Trading Commission in its legal fight with CME. An amicus filing allows a person or group outside a case to offer arguments that may help the court consider the dispute.

HPC, an advocacy group with ties to the Hyperliquid Foundation, based its request on two alleged defects in CME’s case. Its first argument concerns whether CME has suffered the type of injury required to bring the lawsuit in federal court.

CME has relied on a legal principle known as competitor standing. Under that doctrine, a business may establish an injury when government action increases competition in a defined market and creates a predictable economic disadvantage for the company bringing the case.

According to HPC, the CFTC’s decision does not meet that standard because it allows every registered U.S. futures exchange, including CME, to seek approval for comparable perpetual products.

“The CFTC order it challenges does nothing of the kind,” the group said while rejecting CME’s competitor-standing argument.

Rather than placing CME under different rules from its rivals, the agency’s policy provides registered exchanges with a route to list perpetual futures if their products comply with the Commodity Exchange Act and CFTC regulations. HPC therefore contends that CME cannot treat its decision not to use the same route as an injury caused by the regulator.

A recent dismissal request from the CFTC made a similar argument. The regulator told the court on Sep. 2 that CME could seek permission to list comparable contracts and described any disadvantage created by its refusal to do so as “self-inflicted.”

The CFTC also cited CME’s trading data, noting that its Bitcoin and Ether futures volumes in June and August exceeded the levels recorded in May, when Kalshi’s contract received approval. According to the agency, the figures weaken CME’s claim that the decision produced a concrete competitive loss.

CME’s interests may fall outside CEA protections

HPC’s second objection focuses on the “zone of interests” test, which examines whether a plaintiff’s concerns relate to the purposes of the law it has invoked.

In its brief, the group argued that “CME is an unsuitable challenger because its interests fall outside the zone of interests of the CEA provisions it invokes.”

CME’s lawsuit relies on sections of the Commodity Exchange Act that govern how derivatives products are classified and approved. HPC maintains that the exchange is using those provisions to protect its commercial position rather than an interest Congress intended the law to cover.

The CFTC raised the same issue in its motion, arguing that the relevant parts of the Act do not protect an established exchange from lawful competition. A judge could dismiss the case on standing or zone-of-interests grounds without deciding the main question of whether perpetual contracts qualify as futures or swaps.

HPC also accused CME of using the lawsuit to restrict product development in U.S. derivatives markets. Since the CFTC’s decision applies to registered futures exchanges, the group said CME remains free to list a similar instrument but has chosen to challenge another venue’s approval.

“At least for now, CME has decided not to. But instead of leaving other futures exchanges to make their own commercial decisions, CME has asked a court to take the decision out of their hands,” HPC said. “We filed this brief because CME’s anticompetitive effort must fail.”

CME lawsuit centers on futures versus swaps

Filed in the U.S. District Court for the District of Columbia on June 18, CME’s complaint challenges the CFTC’s May 29 approval of Kalshi’s BTCPERP contract and an agency policy statement addressing perpetual futures.

Perpetual contracts track an underlying asset without carrying a fixed expiration date. Funding payments between long and short traders help keep their prices aligned with the referenced market, allowing positions to remain open without traders having to move into a later-dated contract.

CME argues that the lack of a fixed expiry means the products are swaps under the Dodd-Frank Act rather than conventional futures. According to its complaint, the CFTC departed from its previous treatment of similar instruments and created a new regulatory approach without completing a formal rulemaking process.

The exchange has asked the court to vacate Kalshi’s approval and the related policy statement. Its complaint also alleges that the regulator acted arbitrarily and bypassed requirements established by Congress.

As earlier legal coverage from crypto.news explained, the classification determines which trading, registration, and oversight requirements apply. Treating the contracts as futures gives designated contract markets a more direct route to list them, while a swap classification would place the products under a different part of the federal derivatives framework.

The CFTC maintains that the Commodity Exchange Act does not require a futures contract to have a fixed expiration date. It reviewed Kalshi’s application under Regulation 40.3, which permits a designated contract market to request formal approval for a new product.

After assessing BTCPERP, the regulator found that the contract complied with the act and its rules. The agency also said the approval did not mean every perpetual design would qualify, as proposed contracts could still require individual review based on the underlying asset and product terms.

Kalshi was not named as a defendant in CME’s lawsuit. Coinbase, which received related regulatory relief for certain perpetual products, was also not named.

U.S. perpetual futures market continues to expand

For American traders, the court case could affect which regulated platforms can offer perpetual contracts and which legal framework applies to the products. Perpetuals had long been concentrated on offshore crypto exchanges, where access and leverage terms often differ from those permitted at CFTC-regulated venues.

Kalshi has continued adding contracts while the case remains pending. In June, the exchange filed for HYPE perps after rolling out Bitcoin and Ethereum perpetual futures for U.S. customers. The submission placed Hyperliquid’s native token among several crypto assets targeted for regulated derivatives products.

Hyperliquid itself operates an offshore decentralized perpetual exchange and restricts direct access from the United States. A separate route into the U.S. market could come through regulated infrastructure rather than opening the existing platform to American users.

In August, Hyperliquid Labs and Kraken parent Payward entered advanced discussions about offering selected Hyperliquid-linked contracts through Bitnomial, a CFTC-regulated derivatives exchange owned by Payward. Under the reported structure, eligible U.S. traders would access selected products through Bitnomial instead of connecting directly to Hyperliquid.

Payward has presented the proposed arrangement to the CFTC, according to Bloomberg, but the parties have not announced regulatory clearance, a launch date, or the contracts that could be included.

Meanwhile, the CFTC’s dismissal motion has moved the CME case into its next procedural stage. CME must submit its response by Oct. 2, after which the regulator may file a reply, and the court will decide whether to dismiss the action or proceed to CME’s claims over the classification and approval process.