Departing Commodity Futures Trading Commission (CFTC) commissioner Kristin Johnson warned in her farewell speech that prediction markets and some crypto platforms operate with “too few guardrails.”
Key Takeaways
- CFTC commissioner Johnson said prediction markets need adequate oversight.
- Polymarket acquired QCEX for $112 million following the CFTC’s no-action relief.
- Johnson also identified consumer protection gaps in responsible gaming tools.
Her remarks coincide with the CFTC’s no-action relief, enabling Polymarket’s U.S. return via its $112-million acquisition of regulated exchange QCEX, which Johnson used as an example when criticizing firms that rent or buy licenses then pivot to self-certified event-contract offerings, or auction licenses to others.
Johnson also argued prediction markets risk eclipsing crypto in retail cash and lack robust consumer protections, responsible-gaming tools, and transparency. She stated the need for tighter controls rises from previous crypto collapses that allow certain “crypto celebrities” to build exchanges that go bankrupt before re-emerging to solicit new customers.
Her warnings land amid broader regulatory uncertainty, as CFTC’s foreign board of trade framework allows overseas venues to access the U.S. markets, and the SEC-CFTC’s joint statement on spot crypto left many questions unanswered.
Johnson framed consumer protection and market stability as twin pillars for innovation, urging the implementation of safeguards around leverage, custody, incentives, and retail risk.
CFTC gives Polymarket green light For U.S. return
Following the CFTC’s aforementioned no-action relief, Polymarket now has all the approvals needed to go live in the U.S. The letter exempts Polymarket from swaps data reporting and record-keeping requirements for event contracts, which is standard practice for a prediction market that removes major compliance costs.
With this approval and the QCEX acquisition, Polymarket now has the green light to launch as a CFTC- regulated venue competing with Kalshi and Crypto.com on U.S. events contracts spanning elections, macro data, sports, outcomes, and more.
“Polymarket has been given the green light to go live in the USA by the @CFTC. Credit to the Commission and Staff for their impressive work. This process has been accomplished in record timing. Stay tuned,” Polymarket CEO Shayne Coplan said in a post on X.
This move advances Polymarket’s transition from an offshore, crypto-native platform to a domestically regulated exchange.
Underdog to launch prediction platforms with Crypto.com
In other prediction-related news, Underdog Fantasy is partnering with Crypto.com to offer a sports prediction market in 16 U.S. states, primarily those in which sports betting isn’t available. CEO Jeremy Levine stated prediction markets are poised to be about sports, positioning Underdog as the first sports gaming platform to enter the fast-growing category.
The contracts will be listed by Crypto.com Derivatives North America, which is a CFTC-regulated exchange, and on Underdog’s platform using its own tech stack.
The move targets a huge market gap, as California and Texas lack sports betting, while Florida is largely controlled by the Seminole Tribe’s Hard Rock.
