CFTC grants regulatory grace to multiple platforms, predicting an acceleration in market compliance
This Thursday, the U.S. Commodity Futures Trading Commission (CFTC) issued enforcement relief letters to operators such as Polymarket, PredictIt, Gemini, and LedgerX/MIAX, providing regulatory grace related to data rules and approving exemptions from certain record-keeping requirements for these institutions.
According to the letter, as long as the relevant companies meet specific requirements, the CFTC will not take enforcement action or initiate litigation for violations of "specific swap record-keeping requirements" and "failure to report binary options trading data."
The CFTC stated that the applicability of such enforcement relief letters is limited and that their nature is similar to other letters issued for designated contract markets and derivatives clearing organizations.
The letter indicates that institutions granted grace must fulfill multiple obligations, including ensuring that contracts are fully collateralized throughout the process, clearing contracts only through designated platforms, publicly disclosing relevant data after contract execution, and complying with specific swap record-keeping requirements. Some institutions may also complete contract clearing through third-party settlement members.
It is noteworthy that prediction markets are a continuously expanding area in the crypto economy, with significant attention during the 2024 elections, during which the platform Kalshi received judicial approval and launched election-related contracts in the U.S.
This trend also reflects active layouts within the industry. Currently, Polymarket is pushing for the restart of U.S. prediction market operations, Gemini recently obtained CFTC-related approval earlier this week, and cryptocurrency exchange Coinbase is also planning to establish its own internal prediction market platform.
In summary, the CFTC's regulatory easing for multiple prediction markets and crypto platforms not only clears key obstacles for the compliance operations of institutions like Polymarket and Gemini but also sends a signal of tolerance from regulators towards the prediction market, a subfield of the crypto economy.
In the future, as industry infrastructure and framework rules gradually improve, the crypto prediction market is expected to usher in a new wave of scalable growth under a compliance framework, and its influence in the financial derivatives market will continue to rise.
