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HYPE Cryptocurrency derivatives and regulatory developments
On September 9, the Hyperliquid Policy Center (HPC) filed an amicus curiae opinion in the U.S. District Court for the District of Colombia, supporting the position of the Commodity Futures Trading Commission (CFTC) in a lawsuit filed by the Chicago Mercantile Exchange Group. The opinion asked the court to dismiss a lawsuit filed by the CME in June, when the CFTC first approved trading of perpetual contracts in the United States.
HPC is represented by Elizabeth Prelogar, who served as U.S. Deputy Attorney General during the Biden administration (2021 - 2025). Prelogal pointed out in his opinion that CME's lawsuit could have consequences far beyond the case itself. She said that if the court ruled in favor of CME, it would provide a basis for any mature exchange to challenge the CFTC's approval of new products that it did not choose to launch.
What is a perpetual contract and why is it important?
A perpetual contract is a type of futures contract that has no expiration date. It allows traders to speculate on asset price fluctuations without holding the underlying asset. The product has grown significantly in the cryptocurrency derivatives market, with the most notable example being decentralized exchange Hyperliquid (HYPE). [TAG
The CFTC approved Kalshi and Coinbase's first perpetual contracts last month. President Donald Trump said the CFTC is pushing Hyperliquid's perpetual contracts back to the United States in a "fully compliant and legal manner." These approvals mark the first time such products have been allowed to trade in the United States.
CME Group sued the CFTC in June this year, arguing that perpetual contracts would directly compete with its existing products and cause financial damage to the exchange. Terrence Duffy, CEO of CME, has publicly criticized perpetual contracts, calling them "an imminent disaster." Duffy also argued that under the Dodd-Frank Act passed after the 2008 financial crisis, perpetual contracts should be classified as swaps.
HPC believes CME lacks standing to sue
HPC refutes CME's core argument, pointing out that the CFTC approval does not divide existing markets, but rather expands the market by attracting new players who would not otherwise trade in traditional term futures contracts. The submission also noted that Kalshi has been operating as a CFTC regulated exchange since 2020, which means that the approval has not added new competitors to the market.
Prelogal wrote in the opinion: "CME, once an innovation giant, now proposes a novel theory of standing to sue, which states that whenever regulators approve a new product that it chooses not to launch, the incumbent exchange suffers." She added that if CME wins, every future CFTC product approval will trigger litigation from existing institutions, thereby slowing the development of the U.S. futures market.
The case is still pending in the Federal District Court for the District of Colombia.
