CFTC Grants Prediction Markets Flexibility in Data and Record-Keeping Regulations

The Commodity Futures Trading Commission (CFTC) has recently issued “no-action” letters to several prediction markets, allowing them some relief from swap data reporting and record-keeping rules.

Key Takeaways

The CFTC has granted leeway to prediction markets by issuing no-action letters, providing exemptions from certain regulatory requirements.
Platforms must collateralize contracts entirely and publish transaction data on their websites.
Prediction markets allow traders to speculate on the outcome of various events, receiving considerable attention this year.
Trading volumes in prediction markets have surged, highlighting their increasing popularity.

As highlighted in the CFTC's statement, these no-action letters apply to specific scenarios and are similar to past letters granted to other designated contract markets and derivatives clearing organizations.

To remain compliant and avoid potential penalties, the prediction market platforms must ensure that all contracts they issue are fully backed by assets held in reserve. Furthermore, they are required to make time and sales information for all event contract transactions available on their websites immediately after transactions occur.

Prediction markets facilitate trading based on the outcomes of a variety of events, from sports to more unusual topics like the attire choices of politicians. Although prediction markets are currently deemed designated contract markets subject to rigorous reporting and record-keeping standards, the new no-action letter alleviates some immediate regulatory pressures.

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It's important to note that a no-action letter means that CFTC staff will not recommend enforcement actions against the requesting parties for non-compliance under the specific conditions set forth. However, these letters do not alter existing legal standards; they are typically employed to minimize regulatory risk temporarily while the market or product continues to evolve.

CFTC grants prediction markets flexibility in data and record-keeping regulations

The CFTC's divisions for Market Oversight and Clearing and Risk have declared that they won’t move forward with enforcement actions against specific prediction market platforms, as long as these platforms adhere to particular requirements outlined in the letters issued on Thursday. Companies such as Polymarket US, LedgerX, PredictIt, and the prediction markets division of crypto exchange Gemini, known as Gemini Titan, received the no-action letters.

Prediction Markets Experience Remarkable Growth in 2025

This year has seen prediction markets become a significant player within the cryptocurrency sector, with platforms like Kalshi and Polymarket frequently reporting billions in trading volumes.

Kalshi alone recorded trading volumes reaching $5.14 billion over the past month, according to DeFi data aggregator DefiLlama. In comparison, Polymarket, a crypto-based prediction market, reported a trading volume of $1.9 billion in the same period.

Additionally, other firms are entering this rapidly growing field. Crypto.com has recently launched its own prediction market platform, which will be integrated with Trump Media. Moreover, tech researcher Jane Manchun Wong indicated on November 19 that website analytics suggest Coinbase is also developing its own prediction market platform.

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