Crypto.com Faces CFTC Review for Super Bowl Betting Contracts

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It’s being considered that federal authorities might scrutinize the legal status of Crypto.com’s futures contracts, these contracts enable individuals to speculate on the results of significant football matches such as the Super Bowl.

The discussion for this review is happening, since the Commodity Futures Trading Commission (CFTC) is deliberating on a plan that requires these contracts to undergo a 90-day evaluation process.

Regulators Consider a Potential Ban for Crypto.com Betting Contracts

As an analyst, I’m sharing some insights about a potential development regarding the regulator’s review. The review of our operations, initially set for the Super Bowl LIX date (February 9), might extend beyond that point. According to recent reports from Bloomberg, if the overall assessment is concluded, it could lead to a prohibition on our futures products offering. This is just an update based on current information; final decisions will be made by the regulator.

The central question revolves around whether these contracts, accessible on the Crypto.com Chicago-derivatives exchange, potentially infringe upon gambling regulations.

On December 23, Crypto.com revealed they were introducing sports betting products. These products enable users to place wagers on the results of various sporting events.

Kris Marszalek, co-founder and CEO of Crypto.com, stated that this innovative financial tool enables individuals to place wagers on the result of a sports match. This is an entirely fresh idea in the sports world, and we’re excited to lead as the first legally endorsed platform in the U.S. to make it accessible for our users.

crypto.com informed the Commodity Futures Trading Commission (CFTC) about their plan to introduce contracts on December 19, which was close to the holiday season. Consequently, the CFTC had limited time to assess these contracts before they became active.

In spite of this, Crypto.com chose to proceed with the launch on December 23rd. They did so in order to steer clear of the possible danger of forfeiting trading chances prior to the Super Bowl season.

The increase in the usage of event-linked contracts is causing a wave of apprehension, particularly among regulatory bodies like the Commodity Futures Trading Commission (CFTC), which oversees swap and futures market operations. They have expressed reservations regarding contracts linked to sports events and elections.

Chris Grove, an expert in gambling matters, stated on platform X that historically, the Commodity Futures Trading Commission (CFTC) has had a rather conservative stance on defining ‘events.’ He explained that in sports, the most straightforward ‘event’ is the final result of a match. For Contracts for Differences (CFDs), Synthetic Short-term Indebtedness Products (SGPs), and Similar Guaranteed Payouts (sat) to be traded through these markets, there would need to be a significant change in CFTC policies. Grove also pointed out that the incoming administration seems to be favorable towards cryptocurrencies and prediction markets. As a result, a shift in CFTC policy is not only plausible but potentially likely.

At Crypto.com, the agreements are linked to the results of both collegiate and NFL American football matches. Although they do not explicitly refer to these games, users have the opportunity to place bets on events such as the Super Bowl.

The Commodity Futures Trading Commission (CFTC) is set to examine if these contracts fall under the category of unlawful gambling transactions. Importantly, these contracts are valued at $100 apiece and an individual investor can possess as many as 2,500 units.

Previously, the Commodity Futures Trading Commission (CFTC) faced a situation resembling their current one with prediction markets. In fact, they temporarily barred Kalshi from listing and settling cash-based contracts tied to political events because of worries about illegal gambling.

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2025-01-14 18:52