CFTC Scrutinizes Crypto.com and Kalshi's Super Bowl Contracts

The Commodity Futures Trading Commission (CFTC) is closely examining Crypto.com and Kalshi Inc., seeking clarification on how their newly launched Super Bowl event contracts align with U.S. derivatives regulations. This heightened scrutiny follows a Jan. 27 announcement by the CFTC's leadership, which pledged to monitor emerging issues in the derivatives market, with event-based trading products being a key focus.

Crypto.com, which operates a U.S.-based derivatives exchange, notified the CFTC on Dec. 19 of its intent to launch Super Bowl-related contracts by Dec. 23. However, the short notice left regulators with minimal time to review the products ahead of the Christmas holiday and amid concerns over a possible government shutdown. Weeks later, the CFTC is now flexing its regulatory authority, requesting additional information from firms that self-certify their financial offerings.

Under existing derivatives laws, firms that self-certify must demonstrate that their products are not easily manipulated and comply with U.S. regulations. While the CFTC's review process does not grant it immediate power to halt trading, the agency can later issue bans or take enforcement action if concerns arise. A CFTC spokesperson confirmed that the agency is continuing to review the contracts in accordance with its regulations, leaving the door open for potential enforcement or new rulemaking.

Crypto.com remains firm in defending its stance. "We firmly believe in the legality of our event contracts and believe the CFTC is the appropriate regulator to bring federally regulated market integrity, manipulation controls, and product availability in all 50 states," a company spokesperson told Bloomberg. Interestingly, Crypto.com had previously withdrawn two sports-related filings that were under regulatory scrutiny, later opting to self-certify a new contract targeting spectator sports and related industries.

Meanwhile, Kalshi Inc. launched its "Kansas City vs. Philadelphia" Super Bowl market on Jan. 24, which has already seen trading volume climb to nearly $2.5 million as of Jan. 4. Additionally, the company introduced contracts allowing users to wager on brands likely to advertise during the Super Bowl, drawing more than $1.5 million in trading activity.

Amid this, the broader prediction markets industry has seen volatility. During the 2024 U.S. presidential election cycle, Polymarket—the largest decentralized prediction market—processed more than $2.5 billion in