CFTC review requests Crypto.com sports event trading contracts be suspended
Derivatives market regulator could take 90 days to make a decision on whether to permanently ban Crypto.com’s sports-based prediction markets, with the trading platform insisting it will remain live during the process
The Commodity Futures Trading Commission (CFTC) has placed Crypto.com’s sports event trading contracts under review and temporary suspension while it determines whether the product adheres to legal requirements.
The contracts were first launched on December 23, allowing US-based users of Crypto.com and its app to trade the outcome of sporting events.
However, a CFTC-statement issued on January 14 noted the body will conduct a review into the derivatives product to judge whether any aspect breaches CFTC Regulation 40.11(a) as well as section 5c(c)(5) of the Commodity Exchange Act.
CFTC Regulation 40.11(a) prohibits event contracts that reference: “terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law, or that involves, relates to, or references an activity that is similar to any of those activities and that the CFTC determines by rule or regulation to be contrary to the public interest.”
Section 5c(c)(5) of the Commodity Exchange Act allows the CFTC to prohibit listed contracts should the regulator determine said contracts are contrary to the public interest.
The review, which is set to last for 90 days, according to Bloomberg, could lead to the CFTC banning the product permanently.
A spokesperson for Crypto.com said the company has rejected the CFTC’s request to suspend trading while the review is conducted, and also argued the update contradicts recent federal court rulings.
The spokesperson explained: “We remain committed to working with the CFTC and will continue to support our customers and the trading of our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification.”
Crypto.com’s sports event trading product will allows users in all 50 US states to participate, while cash and more than 350 different cryptocurrencies can be used to place wagers
Each user can submit a ‘yes’ or ‘no’ answer to each prediction market and, if correct, earn $100 for each contract they own.
Speaking after the launch of the sports event trading contracts, Crypto.com co-founder and CEO Kris Marszalek said: “This unique financial product allows users to trade their prediction on the outcome of a sports event.
“It’s a fundamentally new concept for sports, and we’re thrilled to be the first regulated platform in the US to offer it to our users.”
Founded in 2016, Singapore-based Crypto.com currently has more than 100 million users across 90 countries. It also has partnerships F1 and the UEFA Champions League.
The CFTC has taken action against other prediction markets in the past, most notably against Kalshi, a firm that has offered markets on US presidential elections.
In 2023, the CFTC was successful in its efforts to ban such markets, but late last year the US Court of Appeals for the District of Columbia ruled in favor of Kalshi.
In the race to the White House between Republican nominee Donald Trump and Kamala Harris, Kalshi topped the App Store download charts in the US at one point.
That came despite the CFTC’s claim that election markets could “incentivize the spread of misinformation by individuals or groups seeking to influence perceptions of a political party or a party candidate’s success.”
Retail financial trading app Robinhood also offered more than 10 million event contracts on November’s presidential election and is considering expansion into the sports betting market.