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, indicating that these companies are not required to meet specific recordkeeping obligations as long as they satisfy other outlined criteria, and may clear contracts through a third-party clearing member.
The CFTC stated in a press release that the no-action letters signify that the regulator will refrain from pursuing enforcement actions—such as a court case alleging the companies violated the law—related to their compliance with “certain swap-related recordkeeping requirements and for failing to report to swap data repositories data connected to binary option transactions.”
“The no-action letters are applicable only in narrowly defined situations and are similar to no-action letters issued for other designated contract markets and derivatives clearing organizations,” the CFTC added.
Per the no-action letters, the issuers are required to: ensure their contracts are fully collateralized at all times, clear their contracts solely through their designated platform, publish all data associated with the contracts on their platforms post-execution, and otherwise adhere to specific swap recording mandates.
Prediction markets represent a rapidly growing segment of the cryptocurrency economy, having seen significant popularity during last year’s 2024 election, particularly as Kalshi, another prediction market platform, received court approval to initiate elections contracts in the U.S.
Polymarket and Gemini are actively working to officially launch (or relaunch, in Polymarket’s instance) prediction market operations in the U.S., with Gemini receiving CFTC approval earlier this week. Additionally, crypto exchange Coinbase is in the process of developing its own internal prediction market platform.
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