The US derivatives regulator, the Commodity Futures Trading Commission (CFTC), launched a review into Crypto.com’s sports contracts yesterday (14 January).
The CFTC notified the North American Derivatives Exchange, trading as Crypto.com, that it will review two of its cash-settled, binary contracts submitted to it on 19 December.
The move comes after the cryptocurrency exchange launched its sports contracts towards the end of last year, beginning with bets on the NFL’s Super Bowl.
The regulator has asked Crypto.com to suspend any trading or listing of the contracts until the end of the 90-day review, which could result in a permanent ban.
A Crypto.com spokesperson told nextpredict.io/: “It is disappointing that the current and imminently departing CFTC leadership would take this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration.
“The majority’s decision to apply this rule contradicts recent Federal Court rulings and conflicts with the current Commission’s own statement set forth in its recent rule proposal.
“We remain committed to working with the CFTC and will continue to support our customers and the trading of our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification.”
What will the new CFTC chair do?
The news follows analysts at Regulus Partners recent note predicting the US government will clamp down on the contracts in 2025.
Exiting CFTC chairman Rostin Behnam warned in an interview with the Financial Times that the line between legitimate and illegitimate financial products is becoming increasingly ambiguous.
Some have argued that incoming president Donald Trump, who will select the new CFTC chair, will be more friendly to event contracts than the current administration.
Prediction market Kalshi, which offers election event contracts that the CFTC has strongly fought against, recently announced Donald Trump Jr. as an advisor to the platform.
Kalshi succeeded in Federal Appeals Court in its case last year to offer these contracts, allowing users to place bets for the 2024 US Presidential Election.