Crypto.com’s decision to offer Super Bowl betting markets has caught the attention of the U.S. Commodity Futures Trading Commission (CFTC). The US regulator is reviewing whether these bets comply with derivatives laws. However, any ruling will only come after the big game on…
The US regulator is reviewing whether these bets comply with derivatives laws. However, any ruling will only come after the big game on Feb. 9. Is this bad news for Crypto.com?
Crypto.com partnered with prediction market Kalshi to offer contracts. They allow users to bet on the outcome of the Super Bowl. However, the CFTC, which oversees derivatives markets, has requested information. They want to see how these contracts align with US derivatives laws.
Crypto.com appears to have taken a risk to offer these contracts before receiving feedback from the CFTC. However, sources close to the matter claim the crypto exchange informed the commission about its plans in December.
However, the regulator did not make any review before launch. While Crypto.com’s Super Bowl contracts could attract strict restrictions later, the exchange believes these contracts are legal and do not flout the CFTC’s policies.
In addition, Crypto.com cannot secure immediate feedback since the CFTC’s review process typically takes at least 90 days.
Despite the uncertainty, trading activity is booming. Kalshi’s Super Bowl market has already attracted over $2.4 million in bets, and a separate market allowing users to bet on Super Bowl commercials has drawn nearly $1.5 million. However, Robinhood Derivatives, which partnered with Kalshi to let some users participate in these bets, has announced a withdrawal. The exchange pulled its products after the CFTC ordered it to stop offering event contracts.
The CFTC has recently stepped up its scrutiny of new financial products, particularly in derivatives markets. Companies that introduce new trading contracts must prove they aren’t vulnerable to manipulation and comply with U.S. regulations. This case could set a precedent for how future event-based markets are regulated.
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