The Commodity Futures Trading Commission (CFTC) has launched a detailed investigation into the activities of Crypto.com and Kalshi Inc., focusing on their recently introduced event contracts linked to the Super Bowl. This development was highlighted in a Bloomberg report.
Crypto.com’s Commitment to Transparency: Addressing CFTC’s Queries
Under the current legal framework, the CFTC possesses the authority to request supplementary information from firms that self-certify their financial offerings. This process ensures that these products are not prone to manipulation and adhere to a set of regulatory standards. The CFTC meticulously evaluates the information provided, which may result in enforcement actions or the formulation of new regulatory guidelines. A CFTC representative confirmed to Bloomberg via email that an active review of the contracts is underway.
Recently, the CFTC announced its intention to conduct public discussions to explore emerging challenges within the derivatives market, including the rapidly growing sector of event contracts. Crypto.com has expressed unwavering belief in the compliance of its event contracts and is ready to fully cooperate with the CFTC’s investigation.
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In a public statement, Crypto.com emphasized its confidence in the CFTC as the appropriate regulatory body to uphold market integrity and enforce manipulation controls nationwide. “We will continue to offer these contracts while we work with the CFTC,” affirmed a spokesperson for the company.
Kalshi’s Exchange: New Avenues for Traders
Earlier this year, the CFTC decided to subject Crypto.com’s sports contracts to a specialized regulatory review to determine whether they should be classified under gaming, a category that typically receives intense scrutiny due to public interest concerns.
Recently, Crypto.com opted to withdraw two filings that were under examination and subsequently self-certified a fresh contract associated with spectator sports and related sectors, as indicated in public records with the agency.
In contrast, Kalshi’s contracts, introduced shortly after President Donald Trump’s inauguration, have not encountered similar levels of examination by the CFTC.
The CFTC’s interest seems to have been piqued by the swift rise of sports-related event contracts offered by Crypto.com since late last year. These financial instruments enable traders to bet on binary outcomes, such as predicting the winner of the Super Bowl between the Kansas City Chiefs and the Philadelphia Eagles. Reports suggest that the CFTC was taken by surprise when these contracts were launched on December 23.
Further adding to the market dynamics, Robinhood Markets recently announced its plans to introduce sports trading options via Kalshi’s exchange for its Robinhood Derivatives clientele. The company highlighted the potential of event contracts as an emerging asset class, stating, “We recognize an opportunity to better serve our customers as their interests converge across the markets, news, sports, and entertainment.”
The evolving landscape of event contracts is reflected in the total cryptocurrency market cap, as shown in the 1D chart, which stands at $3.27 trillion.
Stay tuned for more developments as the CFTC continues its investigation into this rapidly expanding domain of financial trading.
