CFTC Investigates Crypto.com and Kalshi Over Super Bowl Wagers: Report

The United States Commodity Futures Trading Commission (CFTC) is currently investigating Crypto.com and Kalshi, two major players in the crypto and futures markets, after concerns arose about potential violations related to wagers placed on the upcoming Super Bowl. 

Both platforms have gained significant attention from crypto traders and sports fans. Kalshi is known for its event-based contracts and ability to let users trade on the outcomes of real-world events, including the Super Bowl. On the other hand, Crypto.com, a prominent crypto exchange, recently expanded its offerings and ventured into sports prediction markets. The exchange informed the CFTC on December 19 that it would start trading the contracts on the 23rd of the same month.

However, Bloomberg reported at the time that the agency lacked the time to review them before the holiday season, compounded by the looming risk of a government shutdown. 

CFTC Probes Crypto.com & Kalshi 

According to a Bloomberg report, the CFTC’s inquiry centers on how both firms’ Super Bowl event contracts comply with derivatives regulations. The issue arises because such wagers, especially when placed on decentralized platforms, may present challenges for regulators trying to enforce compliance with U.S. futures and commodities trading laws.  

The agency is authorized by law to request further details from companies that “self-certify” their financial products, ensuring they are not easily manipulated and comply with other regulatory standards. It can review the provided information and determine whether to take enforcement actions or start creating a new regulation.

Following the event, a spokesperson for the CFTC informed Bloomberg that the agency is also examining event contracts from the prediction market platform Kalshi. Per the report, the CFTC will be unable to immediately suspend trading of the Crypto.com and Kalshi Super Bowl event contracts, as its review process takes 90 days. This means the Super Bowl on February 9 will have already concluded by the time the review is completed. 

CFTC to Investigate Emerging Issues in the Derivatives Market

However, the CFTC could still ban the contracts after the review period. The latest development came as the new CFTC leadership announced that it plans to examine emerging issues in the derivatives market. 

Nonetheless, the commission’s chair noted that over the next several months, the CFTC will engage with industry leaders, market participants, other market structure experts, and public interest groups through open and transparent public roundtables to provide the agency with the best information and latest data.

Like Crypto.com, Robinhood Markets Inc. announced Monday the launch of its sports trading platform. The platform is available to Robinhood Derivatives clients through Kalshi’s exchange.