CFTC Provides No-Action Relief to Several Prediction Market Platforms

The U.S. Commodity Futures Trading Commission (CFTC) has granted no-action relief to four prediction market operators, easing the regulatory pressure that these platforms have recently faced.

Key Takeaways:

The CFTC has issued limited no-action relief to four prediction markets, reducing their immediate enforcement pressures.
These platforms must fully collateralize all contracts and provide time-and-sales data for each transaction to remain compliant.
This decision comes as prediction market activity has increased significantly, indicating a shift towards more regulatory readiness.

In a recent announcement, the CFTC stated it will refrain from taking action against Polymarket US, LedgerX, PredictIt, and Gemini Titan (Gemini’s division for event contracts) for not meeting specific swap data reporting and record-keeping requirements, provided they adhere to certain outlined conditions.

The CFTC confirmed that the relief granted is limited and aligns with the treatment of other sanctioned contract markets and clearing organizations.

CFTC Provides No-Action Relief

CFTC Shows Flexibility in Supporting Compliance Development for Prediction Markets

The no-action letters signify a cautious willingness on the part of regulators to allow nascent prediction markets to function while they enhance their compliance procedures.

To maintain their relief status, these platforms must ensure that all contracts are fully collateralized, meaning they must have reserves that completely cover every open position.

Additionally, they are required to publish time-and-sales data for each transaction immediately after execution.

These measures are designed to boost transparency and reduce counterparty risks, particularly within markets that deal with a variety of outcomes, including sporting events, political elections, and cultural phenomena.

Because prediction markets are categorized under the CFTC's jurisdiction as designated contract markets, they face extensive reporting obligations that newer platforms often find challenging to meet.

While this latest relief reduces the immediate threat of enforcement, it does not exempt companies from long-term compliance requirements.

The regulatory reprieve comes as 2025 sees a remarkable rise in event-driven trading. The popularity of prediction markets has significantly increased this year, with some platforms exhibiting trading volume comparable to mid-tier cryptocurrency exchanges.

For instance, Kalshi reported a trading volume of $5.14 billion in the past month according to data from DefiLlama, while Polymarket noted $1.9 billion during the same timeframe.

Additionally, major crypto firms are keen to enter this space. Crypto.com has recently launched its own prediction market product that is expected to integrate with Trump Media, and indications suggest that Coinbase is considering a similar offering.

Although the CFTC’s temporary no-action stance provides some relief, the sector now faces heightened expectations for transparency, collateral security, and readiness for comprehensive regulatory scrutiny.

SEC Approves DTCC to Initiate a Groundbreaking Tokenization Program

In a parallel development, the U.S. Securities and Exchange Commission (SEC) has authorized a significant move towards blockchain-based securities markets by granting a rare no-action letter to the Depository Trust Company, a subsidiary of DTCC.

This decision allows the DTCC to start tokenizing U.S. Treasuries, index ETFs, and assets associated with the Russell 1000, with plans to launch on pre-approved blockchains beginning in late 2026.

Such no-action letters are infrequent, indicating strong regulatory confidence in the framework proposed by the DTCC and signaling a broader change in the SEC's approach toward blockchain infrastructure.

The SEC has adopted a notably more accommodating position regarding blockchain initiatives over the past year.

For example, two decentralized physical infrastructure network (DePIN) projects received similar no-action relief, and in late September, the SEC permitted investment advisers to collaborate with state trust companies acting as cryptocurrency custodians.

In August, the agency also issued a no-action letter to Double Zero, surprising many in the industry and creating optimism that the SEC, now under Chairman Paul Atkins, is taking a more balanced approach following years of tension under former chairman Gary Gensler.