CFTC Grants Limited Relief to U.S. Prediction Market Platforms

CFTC Announces New Relief Measures for Prediction Market Platforms

(Source: CFTC)

The U.S. Commodity Futures Trading Commission (CFTC) has recently issued no-action relief letters to four leading prediction market providers: Polymarket, PredictIt, Gemini, and LedgerX/MIAX. These measures allow the platforms, under specific conditions, to bypass certain swap-related recordkeeping and reporting obligations.

The CFTC clarified that this relief is limited to particular scenarios and aligns with previous no-action measures granted to similar institutions.

What Does the Relief Cover?

According to the CFTC’s published documents, recipients of the relief must comply with the following requirements:

• Fully Collateralized: Platforms must ensure every contract is backed by full collateral at all times.
• Exclusive Platform Settlement: All contracts must be settled solely through their designated platform.
• Public Disclosure of Contract Data: Platforms are required to publicly release all relevant transaction details after contract execution.
• Partial Swap Recordkeeping Compliance: While some obligations are waived, certain swap recordkeeping duties remain mandatory.

The CFTC also noted that the purpose of these relief measures is to avoid unnecessary enforcement actions, such as those related to unreported binary options data.

Prediction Markets See Accelerated Growth in the U.S.

Prediction markets have seen rapid growth in the crypto space in recent years, especially surrounding the 2024 U.S. presidential election, with usage surging during this period. Kalshi’s judicial approval to offer election-related contracts in the U.S. has also brought increased attention to the sector.

Polymarket and Gemini are actively working to launch or relaunch their prediction market services in the U.S. Notably, Gemini received formal approval from the CFTC earlier this week. Coinbase is also developing its own prediction market platform, signaling intensifying competition in the market.

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Summary

The CFTC’s latest relief measures provide a clearer regulatory framework for U.S. prediction markets. By easing certain compliance requirements while upholding critical safety and transparency standards, these platforms can continue to legally expand their services. With more providers entering the space, including major exchanges, prediction markets in the U.S. are poised for rapid growth and will increasingly become a significant sector within the crypto industry.