The prediction markets are booming, but CFTC is paying attention. Under the review of Crypto.com and Kalashi, can a strict oversight come for an event-based trading?
Commodity Futures Trading Commission is closely checking Crypto.com And Kalshi Inc., demands clarity on how his newly launched super bowls contracts aligned with US derivative rules, Bloomberg,
This increased inspection falls on the high heel shoe of the January 27 announcement, with the CFTC leadership promised to monitor the emerging issues in the derivative market, in which the event-based trading products fall square in their places.
Crypto.com, which operates US-based derivatives exchange, was Notified CFTC with the intention of starting contracts related to Super Bowl by 23 December on 19 December.
However, the short notice left the regulators over the shortest time to review the products before the Christmas holiday and the potential government shutdowns.
Week later, CFTC is now flexing its regulatory authority, requesting additional information from firms that self-determinate their financial offerings.
Under the existing derivative laws, self-determined firms should show that their products are not easily manipulated and American rules are followed.
While the CFTC review process does not provide immediate strength to prevent trading, the agency can release the restriction later or if concerns arise can take enforcement action.
A CFTC spokesperson confirmed, “We are continue to review the contracts according to our rules, leaving the door open to make possible enforcement or new rules.
Crypto.com remains firm in defending its stance. A company spokesperson told Bloomberg, “We strongly believe in the validity of our event contract and believe that CFTC in all 50 states is suitable regulators Is.”
Interestingly, Crypto.com had withdrawn the first two sports-related filing that were subject to regulatory investigation, later opted to target the sports and related industries of the audience reflecting a new contract.
Meanwhile, Kalshi Ink. Launched On January 24, its “Canus City vs. Philadelphia” Super Bowl Market, which has already seen a trading volume climb up to $ 2.5 million by January 4.
Additionally, the company introduced contracts, allowing users to place bets on brands, which depicts more than $ 1.5 million in trading activity.
In the meantime, comprehensive prediction markets industry has seen instability.
During the 2024 US presidential election cycle, the polymerte- the largest decentralized prediction praised the market-fasting stake with more than $ 2.5 billion at stakes.
However, by January 2025, Volume Dropped Importantly about $ 1.24 billion, reflecting a cooling interest after election campaign.
CFTC ongoing review Corresponds With the entry of Robinhood Markets in event-based trading. On 3 February, Robinhood announced that it would enable its derivative client to trade the sports event contract through the exchange of Kalashi.
“With emerging asset class such as event contracts, we recognize the opportunity to give better service to our customers because their interests converge in markets, news, sports and entertainment,” Robinhood said.
While the agency cannot immediately stop trade of these contracts due to the 90-day review process, it subsequently retains the power to restrict them. With the Super Bowl set for 9 February, any decision will come after the incident.
