Is Crypto.com the Next Target for CFTC after Super Bowl Trades? And What About Robinhood?

The Commodity Futures Trading Commission (CFTC) has initiated an investigation into Super Bowl-related event contracts offered by Crypto.com and Kalshi, questioning their adherence to derivatives regulations as the sports-based trading market expands rapidly.

Interestingly, Robinhood, a major player in the retail trading sector, also introduced the same contracts in collaboration with the event contracts exchange on Sunday, prompting speculation about potential regulatory scrutiny.

The CFTC is focusing its investigation on determining whether these sports-focused event contracts meet the criteria for gaming under current regulations. The agency is specifically interested in assessing compliance with derivatives rules and the susceptibility to market manipulation of these products.

“We are actively reviewing the contracts in accordance with our regulations,” a CFTC spokesman confirmed, mentioning the agency’s plans to organize public roundtables on emerging issues in derivatives markets, including event contracts.

LATEST: The US CFTC is reportedly investigating Super Bowl markets offered by Crypto.com and Kalshi to ensure compliance with derivatives rules. pic.twitter.com/bxCRU9LeMD

Despite regulatory scrutiny, Crypto.com remains confident in its products and asserts the legality of its event contracts, expressing willingness to cooperate with the CFTC while continuing to offer these contracts.

The investigation carries broader implications for the growing event contracts market, highlighted by the CFTC’s decision in January to subject Crypto.com’s sports contracts to special regulatory review, reflecting concerns about the public interest served by such products.

Robinhood Offers Super Bowl Event Contracts Too

Despite ongoing regulatory uncertainties, the market is expanding, with Robinhood’s recent entry presenting a significant growth opportunity for derivatives clients to trade on the Kansas City Chiefs or Philadelphia Eagles through Kalshi’s exchange.

“Available in all 50 states through KalshiEX LLC, a regulated exchange, the Pro Football Championship event contract enables eligible customers to trade on the outcome of the big game,” stated the company in a recent announcement.

Kalshi Robinhood

Today is a major milestone: Kalshi launches its first broker, Robinhood.

25 million more people now have access to our prediction markets. pic.twitter.com/GW2HzU4tJr

It’s important to note that Robinhood previously introduced similar contracts allowing users to predict the US presidential election winner last year, raising questions about the thin line between trading and potential sports betting or gambling.

Similar contracts have also been integrated into the offerings of some FX and CFD brokers like FOREX.com, indicating a trend towards providing comparable solutions in the future.

Regulations

The timing of these developments is crucial, coinciding with recent political changes that could impact the regulatory landscape for innovative financial products.

The central issue revolves around the classification of sports contracts as gaming under the Commodities Exchange Act, with the regulatory outcome potentially setting precedents for the future accessibility of sports-based financial products to retail investors.

Kalshi, a CFTC-regulated financial exchange founded in 2018, enables trading on event outcomes through binary contracts, receiving official approval from the CFTC in late 2020. These contracts pay out based on event outcomes and cover various categories such as economic indicators, weather patterns, political results, and sports events.

Source link

#CFTC #Targets #Crypto.com #Super #Bowl #Trades #Robinhood