CFTC Gives No-Action Leeway to Polymarket, Gemini, PredictIt, LedgerX Over Data Rules
TL;DR
The CFTC granted no-action letters to Polymarket, PredictIt, Gemini, and LedgerX/MIAX, providing regulatory leeway on certain swap recordkeeping and reporting requirements. This allows these prediction market platforms to operate without enforcement risk if they meet specified conditions like full collateralization and data publication.
Key Takeaways
- •The CFTC issued no-action letters to four prediction market firms (Polymarket, PredictIt, Gemini, LedgerX/MIAX), exempting them from certain swap-related recordkeeping and reporting rules.
- •The regulatory relief is conditional: platforms must ensure contracts are fully collateralized, clear through designated platforms, publish contract data, and meet other swap requirements.
- •This move supports the growth of prediction markets in the U.S., with firms like Polymarket and Gemini working to launch or relaunch operations, and Coinbase developing its own platform.
- •The no-action letters are narrowly tailored and similar to those for other designated contract markets, indicating a cautious but supportive regulatory approach to innovation in this sector.
What to know:
- The Commodity Futures Trading Commission granted several prediction-market firms certain regulatory leeway in meeting derivatives rules, suggesting they won't get into enforcement trouble if they do business as intended.
- The no-action letters went to Polymarket, PredictIt, Gemini and LedgerX/MIAX.
- The Commodity Futures Trading Commission granted several prediction-market firms certain regulatory leeway in meeting derivatives rules, suggesting they won't get into enforcement trouble if they do business as intended.
- The no-action letters went to Polymarket, PredictIt, Gemini and LedgerX/MIAX.
The U.S. Commodity Futures Trading Commission issued no-action letters to the operators of prediction markets platforms Polymarket, PredictIt, Gemini and LedgerX/MIAX on Thursday, announcing that the companies did not have to meet certain recordkeeping demands as long as they meet other specified requirements, and that the companies might 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 action — a court case alleging the companies broke the law — tied to how these companies comply with "certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions."
"The no-action letters apply only in narrow circumstances and are comparable to no-action letters issued for other similarly situated designated contract markets and derivatives clearing organizations," the CFTC said.
According to the no-action letters, the issuers must: make sure that their contracts are fully collateralized at all times, only clear their contracts through their designated platform, publish all data tied to the contracts on their platforms after they are executed and otherwise conform to certain swap recording requirements.
Prediction markets are a growing sector of the crypto economy, having dramatically increased in popularity last year during the 2024 election and as Kalshi, another prediction market platform, secured judicial approval to launch elections contracts in the U.S.
Polymarket and Gemini have been working to formally launch (relaunch in Polymarket's case) prediction market operations in the U.S., with Gemini securing a CFTC approval earlier this week. Crypto exchange Coinbase is also working on launching its own in-house prediction market platform.
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