The U.S. Commodity Futures Trading Commission (CFTC) has taken a notable step in the evolving regulation of prediction markets, offering a set of no-action letters to leading platforms including Polymarket, PredictIt, Gemini, and Ledger X/MIAX. The prediction-market industry is growing quickly, so this legal leeway is a big deal. It comes at a time when lots of people want to place bets on elections and other events, especially during the 2024 election cycle.
What Exactly Did the CFTC Do?
According to the announcement, the CFTC has granted the companies regulatory flexibility around certain derivatives and recordkeeping rules. More specifically, these platforms do not have to meet several swap-related recordkeeping and reporting obligations, provided they fully comply with other specific requirements listed in the letters.
In practical terms, the no-action letters mean:
The CFTC will not take legal action over not meeting certain reporting requirements for swaps.
The regulator is granting temporary leniency for issues tied to recordkeeping of binary option transactions.
Firms may even be allowed to clear contracts through a third-party clearing member, subject to conditions.
This aid makes sure that these companies don’t have to worry about being hit with a compliance-related enforcement case. Without this help, they might have to stop or complicate their business activities.
What Platforms Must Do
The no-action letters are helpful, but the CFTC has made sure that customers are protected and the market remains honest by adding strict rules. The regulator says that the platforms have to:
Make sure that all contracts have enough assets to cover them at all times.
Only clear through the platform that has been set for them.
Once the contract is signed, they should post all of the contract’s information on their websites.
Adhere to other specific swap-recording requirements outlined in the letters.
The CFTC stressed in its press release that this relief applies only in “narrow circumstances” and is similar to exemptions provided to other designated contract markets and derivatives clearing organizations. In other words, the regulator is not giving the prediction-market sector a free pass—it is providing limited, targeted flexibility.
Why This Matters for Prediction Markets
Prediction markets have experienced a dramatic surge in user activity and mainstream visibility, especially during the contentious 2024 U.S. election cycle. Sites such as Polymarket and PredictIt saw big increases in volume as users traded contracts that were linked to political results and real-life events.
Kalshi, another big player in the space, just got the green light from the courts to offer U.S. election-related contracts, which is another sign that the regulators are coming to see, and treat, the business as normal.
In this situation, the CFTC’s no-action emails are even more important. They:
It’s important to recognize that prediction markets have turned into a legal and fast-growing part of the crypto world.
Give businesses the time they need to build compliant infrastructure without having to worry about instant regulatory threats.
Support the broader push toward regulated, transparent prediction platforms accessible to U.S. users.
Polymarket and Gemini’s U.S. Expansion Plans
Both Polymarket and Gemini have been positioning themselves for more formal U.S. expansion:
Polymarket is working on a full relaunch in the United States, aiming for a fully compliant and regulated platform.
Gemini, meanwhile, just received a CFTC approval earlier this week to move forward with its prediction market operations.
These no-action letters strengthen that momentum by removing short-term compliance barriers and allowing both companies to advance their U.S. rollouts.
Coinbase Also Joins the Race
Even outside the companies named in the CFTC letters, the ripple effect is clear. Coinbase, the largest U.S. crypto exchange, is also developing an in-house prediction market platform. The company appears to be preparing to compete in what is quickly becoming a lucrative new vertical in the crypto economy.
With regulatory clarity slowly forming and market demand rising, major crypto firms clearly see prediction markets as a high-potential opportunity.
What It Means for the Future
The CFTC’s no-action relief does not change the underlying regulatory framework—but it does send an important message. As long as businesses are open about their finances, have assets to back up their loans, and file their reports on time, the regulator is happy to allow new financial goods.
For forecast markets, this could be the start of:
More organized U.S. government routes
More involvement from institutions
Consumer trust being boosted
A more competitive market with new businesses joining the fray
The area has grown from a niche project to a widely used financial tool that measures public opinion, predicts events, and protects against risks. The CFTC’s method makes it clear that they know about this change and are responding to it.
