The U.S. Commodity Futures Trading Commission issued no-action letters to the operators of prediction market platforms Polymarket, PredictIt, Gemini and LedgerX/MIAX on Thursday, announcing that the companies did not have to meet certain registration requirements as long as they met other specified requirements and that the companies may be able to clear contracts through a third-party clearing member.
The CFTC said in a press release that the no-action letters mean the regulator will not pursue any enforcement actions — a lawsuit alleging the firms violated the law — related to how those firms comply with “certain swap-related recordkeeping requirements and for failure to report swap data repositories associated with binary options transactions.”
“The no-action letters apply only in narrow circumstances and are comparable to no-action letters issued to other similar designated contract markets and derivatives clearing organizations,” the CFTC said.
According to the no-action letters, the issuers must: ensure that their contracts are fully collateralized at all times, clear their contracts only through their designated platform, publish all data associated with the contracts on their platforms after they are executed, and otherwise comply with certain swap registration requirements.
Prediction markets are a growing sector of the crypto-economy that rose dramatically in popularity last year during the 2024 election and when Kalshi, another prediction market platform, secured court approval to launch election contracts in the US
Polymarket and Gemini have been working to formally launch (relaunch in Polymarket’s case) predictive market operations in the US, with Gemini securing CFTC approval earlier this week. Crypto exchange Coinbase is also working on launching its own in-house prediction market platform.
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