Blockchain.com pursues CFTC approval for prediction markets: CNBC

Blockchain.com Pursues CFTC Approval for Prediction Markets

Overview

Blockchain.com has reportedly applied for two licenses with the US Commodity Futures Trading Commission (CFTC) for approval of prediction market offerings and crypto derivatives. This move comes as the courts weigh prediction markets cases, with many state-level authorities filing lawsuits against companies for alleged violations of laws betting on sports and elections.

Regulatory Environment

The licenses, as a designated contract market (DCM) and futures commission merchant (FCM), would allow Blockchain.com to operate as a futures exchange for event contracts and a broker for derivatives contracts, respectively. Blockchain.com announced in July that it planned to partner with Polymarket as part of a prediction markets integration on the company’s app.

Market Impact

If approved, the CFTC license would allow the exchange to offer its own marketplace with event contracts. The question of oversight and enforcement of prediction market platforms like Kalshi and Polymarket is currently being tested in US courts, as many state-level authorities have lawsuits pending against companies for alleged violations of laws betting on sports and elections.

Industry Developments

Last month, New Jersey officials filed a petition with the US Supreme Court to weigh in on their case against Kalshi, which could resolve disputes between federal and state regulators. This week, CFTC Chair Michael Selig justified the agency’s attempts to move forward with cryptocurrency regulation through rulemaking rather than legislation passed by Congress, invoking the downfall of the FTX exchange. The crypto company filed for bankruptcy in November 2022 and led to criminal charges for many of its executives, including former CEO Sam Bankman-Fried.