Tennessee Orders Cease and Desist for Crypto Event Contracts

Tennessee regulators have ordered Kalshi, Polymarket, and Crypto.com to halt sports event contracts, citing unlicensed operations under state gambling laws.

This order impacts state-level enforcement of gambling laws on federally regulated platforms, highlighting jurisdictional conflicts.

Tennessee Cracks Down on Unlicensed Crypto Platforms

The Tennessee Sports Wagering Council has ordered Kalshi, Polymarket, and Crypto.com to cease offering sports event contracts to state residents, citing they lack the necessary licenses. The mandated actions include stopping operations immediately, voiding contracts, and refunding deposits by January 31, 2026.

Failure to comply with this order could result in fines up to $25,000 per violation and felony charges under Tennessee law. This regulatory move targets platforms operating as designated contract markets under CFTC oversight.

Mary Beth Thomas, Executive Director, Tennessee SWC, “The sports events contracts offered on Kalshi’s exchange are not compliant with these protections (and many others) and are an immediate and significant threat to the public interest of Tennessee.”

Public response from these platforms has been limited, although legal experts note potential clashes between state and federal oversight. The market impact remains largely jurisdictional, affecting only transactions within Tennessee.

Implications for Crypto Derivatives Across States

Did you know? The regulatory landscape for crypto derivatives is evolving rapidly as states increasingly assert their authority over financial products.

Kalshi, Polymarket, and Crypto.com are significant players in the prediction market, highlighting the complexities when state regulations intersect with federally regulated financial derivatives.

According to CoinMarketCap, USDC currently trades at $0.99 with a market cap of $74.64 billion. The stablecoin exhibits minimal price fluctuation, including a 90-day change of -0.01%. Its 24-hour trading volume is $3.98 billion, showing a 27.49% decrease.

Coincu’s research team suggests that the Tennessee action could influence other states to pursue similar actions, potentially impacting crypto derivatives. The regulatory landscape will likely demand enhanced compliance efforts from platforms operating across multiple jurisdictions.