The U.S. Commodity Futures Trading Commission on Thursday issued no-action letters to the operators of prediction market platforms Polymarket, PredictIt, Gemini and LedgerX/MIAX, announcing that these companies will not have to meet certain recordkeeping requirements as long as they meet other specified requirements, and that these companies may be able to clear contracts through third-party clearing members.
The CFTC said in a press release that the no-action letter means the regulator will not take any enforcement action regarding how the companies complied with “certain swap-related recordkeeping requirements and failed to report swap data repository data related to binary options trading” (a court case that alleges the companies violated the law).
“No-action letters apply only in narrow circumstances and are comparable to no-action letters issued to other designated contract markets and derivatives clearing organizations in similar circumstances,” the CFTC said.
Under the no-action letter, issuers must: ensure that their contracts are fully collateralized at all times, liquidate contracts only through a designated platform, publish all data related to the contracts on their platform after execution, and comply with certain swap recording requirements.
Prediction markets are a growing area of the crypto economy, and their popularity surged during last year’s 2024 election as another prediction market platform, Kalshi, received judicial approval to launch an election contract in the United States.
Polymarket and Gemini have been working on officially launching (in Polymarket’s case, relaunching) their prediction market business in the United States, with Gemini receiving approval from the CFTC earlier this week. Cryptocurrency exchange Coinbase is also working on launching its own in-house prediction market platform.
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