The U.S. Commodity Futures Trading Commission (CFTC) has requested additional details from Crypto.com and Kalshi Inc. regarding their Super Bowl event contracts. They are seeking clarity on their adherence to derivatives regulations.
CFTC’s Allegations Against Crypto.com & Kalshi
Under existing rules, firms that “self-certify” financial products must provide sufficient evidence that their offerings meet regulatory standards, including protections against market manipulation. The CFTC has the authority to assess these responses and determine whether to initiate enforcement actions or introduce new regulations.
A spokesperson for the commission confirmed via email that the agency is actively reviewing the contracts to ensure compliance with regulatory guidelines. Recently, the CFTC announced plans to hold public roundtable discussions to explore emerging issues in derivatives markets, with event contracts being one of the primary topics.
In January, the CFTC decided to subject Crypto.com’s sports-related contracts to a specialized regulatory review. The review aims to determine whether these contracts should be classified as gaming, a category that typically undergoes heightened scrutiny to assess their impact on public interest. A final vote on whether to restrict these contracts is anticipated by mid-April, though they remain available for trading in the meantime.
Kalshi Inc., which introduced its event contracts shortly after former President Donald Trump’s inauguration, was not placed under the same review process. Crypto.com ventured into sports-focused event contracts late last year, launching them on December 23.
These derivatives contracts enable traders to speculate on the outcome of sports events, such as whether the Kansas City Chiefs or the Philadelphia Eagles will emerge victorious in the upcoming Super Bowl. The abrupt introduction of these contracts reportedly took the CFTC by surprise.
The latest regulatory scrutiny coincides with Robinhood Markets Inc.’s announcement on Monday that it is entering the event contracts space. The company revealed plans to introduce sports trading services via Kalshi’s exchange for its Robinhood Derivatives clients.
“As event contracts gain traction as an asset class, we see an opportunity to enhance our offerings to align with customers’ interests across financial markets, sports, entertainment, and news,” Robinhood stated, according to a report by Bloomberg.
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Source: https://www.cryptonewsz.com/cftc-probes-crypto-com-kalshis-super-bowl/