The U.S. Commodity Futures Trading Commission (CFTC), which positions itself as the leading regulator of prediction markets managed by companies like Kalshi, Coinbase, Polymarket, and Crypto.com, issued a warning on Friday reminding these companies that simplifying the contract certification procedure covering a wide range of events is not permissible.
The agency stated that 'general, template certificates should not be submitted,' marking the second instance in recent months where the regulator had to caution against overly generalized documents.
Many of the 'designated contract markets' regulated by the CFTC 'continue to self-certify event contracts' (in other words, prediction market contracts) using general templates, 'without providing the terms for each offered combination, as well as a brief explanation and analysis of the product terms, underlying commodity, and the product’s compliance with requirements,' the agency said in a statement.
The regulator stated that bypassing the procedure could undermine its ability to determine whether a firm has provided 'all necessary information, explanations, and analysis,' as well as whether it has 'adequately assessed the settlement methodology, data sources, and compliance with the core principles of all contract options.'
Nevertheless, the agency clarified that 'closely related event contracts may be certified as a single class,' citing legitimate ways to submit consolidated filings with common appendices.
The explosive growth of the event contract market - particularly in the areas of sports betting and political outcome prediction - to some extent represents a situation requiring an on-the-fly solution, given the relative inexperience of much of the industry and the uncertainty of the CFTC's legal status.
The CFTC's status as the primary regulator of prediction markets itself still faces some legal uncertainty, which is expected to be resolved by the courts - perhaps at some point by the U.S. Supreme Court. While the regulator's chairman, Mike Selig, has made it an agency priority to wage a full-scale battle in state and federal courts across the country, insisting that the CFTC bears sole responsibility for overseeing event contract platforms, a large number of states are pursuing these companies on charges of illegal sports betting, which should be regulated at the state level.
Also on Friday, the Commodity Futures Trading Commission (CFTC) issued a notice extending the regulatory status of the Kraken platform, the Kraken Derivatives Exchange, which had been in 'inactive' status. The last trade on this exchange was made in early 2025, and the CFTC's approval of the company's request means 'granting the registered entity the opportunity to resume operations.' Kraken stated that it needs more time to evaluate its next steps following the acquisition of Bitnomial earlier this year.
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