U.S. CFTC issues no-action letters to prediction market platforms… Will regulatory adoption accelerate?

The U.S. Commodity Futures Trading Commission (CFTC) has issued no-action letters to prediction market platforms.

On the 11th (local time), the CFTC said in a press release that "it will take no action with respect to swap data reporting and recordkeeping requirements for Polymarket, PredictIt, Gemini, LedgerX MIAX, and others." However, it emphasized that "the scope of applicability is very limited, as in cases granted to derivative markets and clearinghouses with similar status."

According to the conditions of the no-action letters, the platforms that received them must ▲keep all contracts at 100% collateralization at all times ▲clear contracts only on their designated platform ▲publicly disclose platform data related to executed contracts ▲comply with certain swap recordkeeping requirements, among other items. It was also confirmed that they left open the possibility of clearing contracts through third-party clearing members.

Meanwhile, prediction markets rapidly grew last year amid the U.S. presidential election cycle and Kalshi's approval of election betting products. Polymarket and Gemini have been continuously seeking regulatory approval to operate legal prediction markets in the United States, and Gemini completed the approval procedures with the CFTC for the related business earlier this week. Coinbase is also preparing to launch its own prediction market platform.