The Commodity Futures Trading Commission (CFTC) is digging into Crypto.com and Kalshi Inc. over some new event contracts tied to the Super Bowl, as spotlighted by Bloomberg.
Crypto.com Ready to Cooperate: Set to Tackle CFTC’s Inquiries
Under current laws, the CFTC has the jurisdiction to request more details from companies that self-approve their financial offerings. This is to ensure that their products aren’t prone to manipulation and adhere to various regulatory standards.
The agency evaluates the feedback they receive, and this could lead to enforcement actions or even the development of new regulations. A CFTC spokesperson confirmed to Bloomberg through email that they are actively examining these contracts.
Recently, the agency announced plans to host public discussions focusing on emerging topics in the derivatives market, with event contracts being a prominent point of interest.
Crypto.com, on its part, is confident about the legality of its event contracts and is ready to work alongside the CFTC through their scrutiny. The company, in a statement, emphasized its confidence in the CFTC being the right regulator to maintain market integrity and manage manipulation controls nationwide. "We’ll keep providing these contracts while engaging with the CFTC," their spokesperson reassured.
Kalshi’s Platform Opens New Avenues
Earlier in the year, the CFTC decided to place Crypto.com’s sports contracts under close regulatory observation to determine whether they fell under the category of gaming, a sector subject to greater scrutiny concerning public interest.
Recently, Crypto.com had to pull back two filings that were under review but self-certified a new contract linked to spectator sports and related industries, according to documents made public by the agency.
Kalshi’s contracts, which saw the light of day shortly after Donald Trump’s presidency began, haven’t encountered the same level of scrutiny from the CFTC.
The CFTC’s curiosity seems to be sparked by the sudden introduction of sports-related event contracts that Crypto.com started offering toward the end of last year.
These derivatives give traders the chance to place bets on binary outcomes, like predicting whether the Kansas City Chiefs or the Philadelphia Eagles will clinch the Super Bowl title. Reportedly, the CFTC was taken aback by the rollout of these contracts on December 23.
Adding to the rapidly evolving scene, Robinhood Markets announced on Monday that it would roll out its own line of sports trading options through Kalshi’s exchange, catering to Robinhood Derivatives clients.
Robinhood has acknowledged the potential of event contracts as an emerging asset class, stating, "We see a chance to serve our clients better as their interests intersect across markets, news, sports, and entertainment."
Featured image from DALL-E, chart from TradingView.com
