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The U.S. Commodity Futures Trading Commission (CFTC) has launched an investigation into Crypto.com and Kalshi over their compliance with regulations related to event-based contracts, specifically those linked to the Super Bowl. The probe comes amid growing regulatory scrutiny over the expanding market for crypto-powered event wagering and prediction markets.
Why Is the CFTC Investigating?
Both Crypto.com, a major cryptocurrency exchange, and Kalshi, a regulated event-based trading platform, have reportedly offered contracts related to the outcome of Super Bowl events. The CFTC is now assessing whether these offerings comply with federal derivatives laws and whether they fall under prohibited forms of gambling.
In the past, the agency has taken a strict stance on prediction markets, ensuring they do not cross into the realm of illegal betting or unregulated financial instruments. The key concerns include:
- Regulatory Classification: Whether these contracts qualify as regulated derivatives under U.S. law.
- Consumer Protection: Ensuring users are not exposed to unregistered or high-risk financial products.
- Precedent for Event-Based Trading: The potential impact of such contracts on financial markets and sports betting regulations.
Crypto & Event-Based Trading: A Growing Concern
The CFTC has been closely monitoring platforms like Kalshi, which allow users to trade contracts based on real-world events such as elections, economic data releases, and now, sports outcomes. The introduction of crypto-backed Super Bowl-related contracts has further complicated the regulatory landscape, as authorities seek to draw clear boundaries between speculative trading and traditional sports betting.
If the CFTC determines that Crypto.com or Kalshi violated derivatives trading laws, they could face regulatory action, including fines or restrictions on offering such contracts in the future. The outcome of this investigation could set a precedent for how crypto exchanges and event-based trading platforms structure their offerings moving forward.
As the intersection of crypto, prediction markets, and sports betting continues to evolve, regulatory clarity will be key to ensuring compliance. The CFTC’s probe into Crypto.com and Kalshi highlights the growing oversight in this space, signaling that financial regulators are keeping a close watch on event-driven trading.
