A coalition of leading American commodity exchanges urged the Commodity Futures Trading Commission to block Kalshi’s new oil perpetual futures, warning that market integrity could be compromised.
According to Bloomberg, the Commodity Markets Council (CMC)—representing CME Group alongside established derivatives venues—cautioned regulators against greenlighting the proposed West Texas Intermediate crude contract, citing risks that might be introduced to the market.
The trade association raised sharp concerns about commodity perpetual futures and urged officials to stop American retail investors from accessing overseas derivatives venues, ensuring VPN exploitation is effectively blocked.
CMC’s opposition stems from Kalshi’s October 20 submission for its WTIPERP product, designed so oil price exposure can be maintained by traders without constantly rolling into new monthly futures.
Reports indicate the council’s letter avoided naming Kalshi directly, even though the filing dates and contract specifics highlighted in the submission match what was proposed by the firm.
Kalshi’s Oil Futures Plan Draws Pushback From Industry Groups
Kalshi’s planned product tracks WTI crude oil pricing through a benchmark derived from two front-month New York Mercantile Exchange contracts, providing a structure by which continuous exposure is created.
Unlike standard oil futures that expire on set dates, WTIPERP preserves a continuous position through an underlying valuation mechanism by which current market pricing is directly mirrored.
The proposed model relies on daily funding fees to keep trading values aligned with benchmark prices, with each cash-settled contract sized at 100 barrels of crude rather than the 1,000 barrels covered by conventional WTI futures.
Market operations would run during standard oil futures hours, incorporating weekend breaks, holidays, and planned early sessions, while Kalshi established safeguards ensuring trading is halted whenever underlying markets face suspension.
CMC questioned whether such instruments can sustain the strong link to physical commodity markets that conventional futures maintain, ensuring convergence is preserved as delivery dates draw near.
Standard futures prices typically converge toward physical cash values near expiration, whereas perpetual contracts rely on funding rates to ensure alignment is maintained with the markets they track.
Kalshi insists its planned valuation model remains anchored to conventional oil futures, telling Bloomberg it consulted industry groups prior to filing, though certain parties left specific concerns unraised.
WTIPERP has not yet gained CFTC approval, leaving the proposed product subject to ongoing scrutiny by federal regulatory authorities.
Offshore Perpetual Exchanges Come Under Increased Regulatory Scrutiny
CMC’s misgivings reach far beyond products listed on regulated domestic venues, highlighting potential risks that are posed by unregulated derivative platforms.
The council urged the CFTC to collaborate with international regulators, pushing to block American retail investors from reaching offshore derivatives platforms when VPN access is utilized.
Decentralized venues like Hyperliquid have built active perpetual futures markets tied to digital tokens and traditional assets, allowing diverse commodities and equity indices to be traded globally.
Unlike Kalshi’s proposed oil offering, several offshore perpetual venues run non-stop, enabling traders to establish positions during hours when regular commodity exchange operations are paused.
CMC and legacy industry players voiced deep concerns regarding price manipulation, oversight gaps, and sanctions compliance, stressing that systemic vulnerabilities are created by decentralized derivatives trading.
Hyperliquid has reportedly held talks with US regulators regarding onshore expansion under federal rules, though no official approval has been announced.
Kalshi, meanwhile, continues broadening its derivatives suite past traditional event contracts, ensuring new market exposure is provided to retail investors.
The firm currently lists perpetual products tied to Bitcoin, Ethereum, XRP, and HYPE, alongside contracts tracking precious metals and equity benchmarks, ensuring market access is broadened across multiple asset classes.
The proposed oil contract would give eligible traders another regulated venue for gaining exposure to crude prices, provided regulatory clearance is granted by the CFTC.
Kalshi Faces Multiple Legal Challenges Over Its Prediction Markets
Kalshi’s derivatives push unfolds while the firm battles state regulators over whether its event contracts fall under federal financial oversight or if jurisdiction is retained by state gambling authorities.
Utah Attorney General Derek Brown filed a civil lawsuit on October 20 accusing Kalshi and affiliated entities of running illegal gambling operations through event contracts tied to sports, political outcomes, and other real-world occurrences, ensuring accountability is sought through state courts.
As reported on October 21, Utah aims to claw back up to $61.2 million in allegedly unlawful fees, ensuring state residents are shielded from further access to the disputed offerings.
Brown emphasized that these operations inflict severe, ongoing harm on Utah residents, urging the court to issue financial restitution while appropriate remedies are ordered.
Kalshi suffered an earlier setback in September when the Tenth Circuit rejected an emergency request, ensuring state gambling laws were kept enforceable by Utah while the appellate process unfolded.
Federal courts remain split over whether individual states can enforce local gambling statutes against Kalshi’s sports prediction markets, ensuring a murky legal landscape is maintained for event contracts.
The Third Circuit ruled in Kalshi’s favor regarding New Jersey oversight, whereas courts weighing parallel disputes across Nevada, Ohio, and Tennessee reached divergent conclusions, ensuring local gambling restrictions were kept enforceable against the exchange.
New Jersey escalated the dispute to the Supreme Court, urging the justices to resolve whether federal commodities statutes preempt state oversight of sports event contracts, a petition that was formally backed by the National Football League in an October 8 filing.
The petition before the Supreme Court remains pending, with Kalshi allowed until November 9 to file its formal response.
Meanwhile, CFTC officials submitted draft event contract rules to the White House for review, addressing how regulators classify event products under federal derivatives law while clarifying whether casino-style offerings should be permitted.
