The Commodity Futures Trading Commission's staff has issued a no-action letter that effectively relieves swap data reporting and recordkeeping requirements for prediction market platforms, expanding the scope beyond the original 19 beneficiaries. According to the latest announcement, the CFTC's Division of Market Oversight and Division of Clearing and Risk said they will not recommend the agency to launch enforcement actions against designated contract markets (DCMs), clearinghouses, and market participants for failing to abide by such reporting requirements. As reported by The Block, this position is in response to numerous requests from DCMs and DCOs that list and clear event contracts, with the divisions intending for today's no-action position to streamline the process for addressing such requests and ensure uniform treatment of market participants.
The latest no-action letter introduces a streamlined approval process for future applicants seeking regulatory relief for event contract reporting. According to the CFTC announcement, entities that want to list or clear similar contracts can now seek the same no-action position, and the CFTC can add them to an appendix rather than issue another full letter each time. The letter says this approach should give similar treatment to current and future market participants while the agency considers broader rulemaking for event contract reporting. Staff stated that the position also covers earlier beneficiaries of similar no-action letters, providing comprehensive regulatory clarity for the rapidly growing prediction market sector.
The no-action letter was published to eliminate regulatory uncertainty for platforms offering event contracts, which technically qualify as 'swaps' in that they are based on events with binary outcomes. According to the letter, such contracts may meet the 'swap' definition, but are listed for trade by DCMs (rather than swap execution facilities) and have similar characteristics as futures and options on futures, including highly-standardized terms, exchange-trading protocols, fungibility, and offset. The letter allows firms to report certain event contracts directly to the Commission in a form similar to that provided for futures and options, providing clarity for the rapidly growing prediction market sector. The relief covers certain swap data reporting and recordkeeping duties tied to contracts listed by designated contract markets and cleared by derivatives clearing organizations.
The timing of this regulatory relief comes as prediction markets experience explosive growth, with Kalshi reaching a $22 billion valuation after a $1 billion Series F round. According to separate market coverage, annualized trading volume on the platform rose dramatically from $52 billion to $178 billion in six months. Kalshi CEO Tarek Mansour stated that "event contracts could become a trillion-dollar market," highlighting the significant market potential that regulators are now addressing through clearer reporting frameworks. The industry is projected to hit $1 trillion in value within four years, indicating strong adoption potential but elevated regulatory risk for crypto prediction markets and DeFi-related betting platforms.
The regulatory developments in prediction markets occur alongside significant shifts in global stablecoin regulation, with the Bank of England reportedly reconsidering its proposed sterling stablecoin restrictions following industry pressure. As reported by The Financial Times, BoE Deputy Governor Sarah Breeden stated the central bank is "looking very hard" at alternatives to its proposed approach, with the planned regime limiting individuals to £20,000 ($27,000) and businesses to £10 million ($13.5 million) in holdings. Breeden acknowledged that the initial plans may have been "overly conservative" and expressed openness to exploring different risk management approaches. The BOE is also prepared to lower its planned requirement that at least 40% of stablecoin-backing assets should be deposited with the central bank, earning no interest, and 60% invested in short-term U.K. government debt. Industry participants, including Coinbase's European policy head, have welcomed these signals as important for maintaining U.K. competitiveness in the digital economy.
