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The US commodities regulator is reportedly investigating Super Bowl markets offered by Crypto.com and Kalshi, asking them how they comply with derivatives rules.
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The US Commodity Futures Trading Commission has reportedly asked Crypto.com and predictions market Kalshi to explain how their Super Bowl events contracts comply with derivatives regulations.
“We are continuing to review the contracts in accordance with our regulations,” a CFTC spokesman reportedly told Bloomberg on Feb. 3.
Bloomberg previously reported on Jan. 14 that the CFTC was considering investigating the legality of Crypto.com’s futures contracts related to the upcoming Super Bowl.
Crypto.com, which operates a US-based derivatives exchange, alerted the CFTC on Dec. 19 that it would start trading the contracts on Dec. 23.
However, Bloomberg reported at the time that the CFTC didn’t have time to review them before the Christmas season alongside a looming threat of a government shutdown.
The commission, now led by Caroline Pham, can’t immediately halt the trading of the Crypto.com and Kalshi’s Super Bowl event contracts, as any review must take 90 days, and the Feb. 9 Super Bowl will have finished by then.
The CFTC could, however, ban the contracts after that.
The latest development follows a Jan. 27 announcement from the new CFTC leadership that it would look closely into emerging issues in the derivatives market.
The CFTC is permitted by statute to request additional information from firms that “self-certify” their financial products, where they must show those products aren’t susceptible to manipulation and comply with derivatives regulation. The CFTC then decides whether any enforcement action is necessary.
Cointelegraph reached out to Crypto.com and Kalshi but didn’t receive an immediate response.
Kalshi’s “Kansas City vs Philadelphia Football” who-will-win Super Bowl market launched on Jan. 24 and has seen over $2.4 million in trading volume.
Kansas City vs Philadelphia Super Bowl odds on Kalshi. Source: Kalshi
Kalshi is also allowing bettors to punt on which companies will run ads during the Super Bowl, which has attracted nearly $1.5 million in trading volume.
Related: CFTC chair’s final message includes a call for crypto guardrails
It comes as Robinhood Derivatives announced on Feb. 3 that certain traders can now bet on the Super Bowl through its partnership with Kalshi.
Predictions markets allow traders from all around the world to wager on anything from sports to how many X posts multibillionaire Elon Musk will make in a single week.
Many prediction markets are powered by blockchain technology, including Polymarket, which saw more than $3.6 billion worth of bets placed on the US election last November.
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This article first appeared at Cointelegraph.com News
