Emily Walker
The Commodity Futures Trading Commission (CFTC) is currently investigating Crypto.com and Kalshi Inc. concerning their new event contracts linked to the Super Bowl, as reported by Bloomberg.
Crypto.com Ready to Assist with CFTC Questions
The CFTC can request further information from companies that self-certify their financial products, aiming to ensure these offerings are resistant to manipulation and comply with regulatory standards.
The commission will evaluate the information it receives, potentially resulting in enforcement actions or the creation of new regulations. A CFTC representative confirmed to Bloomberg that they are looking into the contracts in question.
Recently, the agency announced it would hold public discussions focusing on new challenges in the derivatives market, particularly regarding event contracts.
Crypto.com has stated its confidence in the legality of its event contracts and is committed to cooperating fully with the CFTC’s inquiries. The company believes that the CFTC is the right body to oversee market integrity and anti-manipulation measures nationwide. “We will continue to offer these contracts while we work with the CFTC,” a spokesperson declared.
Kalshi’s Exchange Paves the Way for New Opportunities
Earlier this year, the CFTC initiated a specialized regulatory review of Crypto.com’s sports contracts to determine if they fall under gaming regulations, which typically have more scrutiny regarding public welfare.
Recently, Crypto.com retracted two contract filings for evaluation and submitted a new self-certified contract in relation to spectator sports and related sectors, according to agency records.
Conversely, contracts offered by Kalshi, which were introduced shortly after Donald Trump’s inauguration, have not encountered the same level of scrutiny from the CFTC.
The CFTC’s inquiry seems to have arisen from the rapid introduction of sports-related event contracts by Crypto.com, which started late last year. These derivatives let traders speculate on binary outcomes, such as predicting the winner of the Super Bowl between the Kansas City Chiefs and the Philadelphia Eagles. Reports suggest the CFTC was surprised by the roll-out of these contracts on December 23.
In a related development, Robinhood Markets recently announced plans to launch its own sports trading options via Kalshi’s exchange for clients engaged in derivatives. The company recognizes the potential of event contracts as a new asset class, stating, “We see an opportunity to better cater to our customers as their interests merge across markets, news, sports, and entertainment.”
Image credit: DALL-E, chart from TradingView.com