CME in Court, Citadel at the SEC: Two Fronts Against Kalshi's Perpetuals

Kalshi's push into perpetual futures, contracts with no fixed expiration date, has drawn two distinct legal and regulatory challenges since June 2026. CME Group sued the CFTC in the U.S. District Court for the District of Columbia on June 18, 2026, over the agency's approval of Kalshi's bitcoin perpetual contract, BTCPERP.

Citadel Securities took a different route entirely. On September 9, 2026, it sent a letter to the SEC and CFTC arguing that the SEC, not the CFTC, should oversee event contracts tied to individual public companies, a question sharpened by Kalshi's reported plans to seek approval for roughly 60 single-stock and ETF perpetual contracts on names including Tesla, Apple, and Nvidia.

The CFTC approved BTCPERP on May 29, 2026, alongside a policy statement letting any designated contract market list perpetual contracts. CME's suit contends that a cash-settled, no-expiration contract meets the Commodity Exchange Act's definition of a swap rather than a futures contract, and that the CFTC approved it on an expedited basis without the scrutiny that classification would require.

CME chief executive Terry Duffy called the approval 'a disaster waiting to happen' for market integrity. The CFTC pushed back that perpetual contracts roll daily and function as a series of fixed-duration positions, and on September 2, 2026, moved to dismiss the suit, arguing CME's claimed competitive injury is 'entirely self-inflicted' since the same order lets CME list its own competing bitcoin perpetual.

On September 9, 2026, the Hyperliquid Policy Center filed an amicus brief, represented by former U.S. Solicitor General Elizabeth Prelogar, urging the court to dismiss CME's suit. The brief argues CME lacks Article III standing because the CFTC's approval expanded the perpetual-futures market rather than excluding a competitor from a fixed one.

Prelogar's brief warned of the precedent a CME win would set: 'Once a titan of innovation, CME now advances a novel theory of standing under which an incumbent exchange is injured whenever its regulator permits a new product that it chooses not to offer.' Hyperliquid, an offshore, on-chain perpetuals venue with its own interest in how U.S. regulators treat the product category, is not a party to the case but has an evident stake in the outcome.

Citadel Securities' letter takes aim at a different vulnerability in the same approval pipeline: CFTC Rule 40.2 self-certification, which lets a designated contract market list a new product the next business day without advance regulatory review or public comment. Stephen John Berger, Citadel's global head of government and regulatory policy, wrote that 'a trading venue should not be able to effectively choose its regulator for an equity-linked product based on its own unilateral characterization of such product.'

The letter singles out contracts tied to corporate key performance indicators as a distinct insider-trading risk, since a settlement tied to non-public corporate data creates a surveillance gap that Citadel argues securities-market rules, not derivatives self-certification, are built to close. It does not name Kalshi or any specific contract, but it arrives as Kalshi is reportedly preparing to seek approval for stock-linked perpetuals trading up to 23 hours a day on weekdays, matching the cadence of the underlying equity markets rather than the 24/7 schedule of its crypto perpetuals.

CME's suit and Citadel's letter use entirely different legal levers, a Dodd-Frank swap-versus-futures classification fight in federal court against a jurisdiction-turf argument addressed to two regulators, but both ultimately ask whether the CFTC's expedited approval and self-certification tools are being stretched to cover products Congress did not clearly assign to that pipeline. Neither one is a challenge to prediction markets on gambling-law grounds; both come from market participants and incumbents, not state regulators.

Kalshi has not yet formally filed its single-stock perpetuals application, and the CME suit's motion to dismiss remains pending before the D.D.C. court. For any operator building a similar perpetuals or equity-linked product on the same regulatory model Kalshi has used for bitcoin and metals, the practical lesson is that scrutiny of that model is no longer coming only from state gambling regulators. It is now also coming from incumbent exchanges in litigation and from market-making firms writing directly to the agencies with jurisdiction over the product.