Key Points:
- The CFTC is reviewing the legality of Crypto.com futures contracts linked to the Super Bowl amid concerns over potential gambling law violations.
- Crypto.com submitted the contracts for approval in December, but regulatory delays and a possible 90-day review could extend the decision beyond the Super Bowl.
According to Bloomberg, the U.S. Commodity Futures Trading Commission is weighing whether Crypto.com futures contracts linked to sports events, including the Super Bowl, conform to the law.
Read more: Crypto.com CEO Discusses Crypto Regulation With Trump
CFTC Looks into the Legality of Crypto.com Futures Contracts
Crypto.com futures contracts enable users to trade on the outcome of such events, thus raising concerns over possible violations of laws banning gambling.
Five commissioners of the CFTC are deciding on whether to proceed with a 90-day review of the contracts that might be delayed past the Super Bowl for procedural reasons. Crypto.com self-filed notice in December of the contracts at issue. The agency delayed immediate review at the time, citing a lack of time.
Unlike traditional sports betting, Crypto.com’s platform pairs buyers and sellers and takes a fee from transactions. The Crypto.com futures contracts, which are available to customers in all U.S. states, include events such as college and NFL games, though it does not use official team or event names across the company’s website and social media accounts.
Specific matches, including potential Super Bowl contenders like the Kansas City Chiefs or Baltimore Ravens, do appear on its app.
Event-Based Trading Raises Legal and Regulatory Challenges
The CFTC’s cautious approach to similar markets in the past reflects its struggle to address the growing intersection of event-based trading and legal boundaries. Such was the case when, in early 2021, ErisX withdrew a proposal for similar contracts before the CFTC could formally vote on their legality.
Crypto.com’s move comes after a similar but more contentious decision by the exchange Kalshi, which launched and then paused a futures market linked to a criminal case after regulators intervened.
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