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ZEC $1,261 Binance US and Blockchain.com seek CFTC approval for prediction markets
Both crypto firms have applied for US regulatory approval to offer event contracts, joining a growing list of exchanges moving into prediction markets.
Key takeaways
- Volumes are climbing. Combined trading on Polymarket and Kalshi rose from $17 billion in January to $72 billion in September, an increase of more than 300%.
- Crypto trading is down. Spot cryptocurrency trading volumes fell 18% over the same period, while Bitcoin and Ethereum declined 28% and 42% over 12 months.
- Approval is not launch. Neither company's application amounts to authorization to begin offering the products, and Binance US is separately seeking up to $100 million at a valuation near $1 billion.
What happened
Binance US and Blockchain.com have applied to the US Commodity Futures Trading Commission for approval to offer regulated prediction markets and related derivatives to US customers. Blockchain.com is seeking two licenses: a Designated Contract Market license to run a regulated futures exchange and a Futures Commission Merchant license to act as a broker for derivatives contracts.
The Financial Times reported that Blockchain.com applied for a US license last week to offer regulated event contracts, while Binance US recently submitted its own application. Binance US chief executive Stephen Gregory had earlier confirmed plans to apply for a CFTC Designated Contract Market license in August.
Blockchain.com chief executive Peter Smith told the Financial Times that the growth of prediction markets reminded him of early crypto trading. He said users should be able to manage digital assets, trade derivatives and take positions on real-world events without switching between apps. Blockchain.com already offers prediction markets through a partnership with Polymarket to eligible international users.
Why it matters
The applications come as crypto exchanges look for new revenue while digital asset trading slows. Combined trading volumes on Polymarket and Kalshi rose from $17 billion in January to $72 billion in September, an increase of more than 300%. Over the same period, spot cryptocurrency trading volumes fell 18%.
Bitcoin and Ethereum had declined 28% and 42% over the previous 12 months, while XRP and Solana had lost roughly half their value, according to the report. Coinbase, Crypto.com, Gemini and Bullish are also pursuing prediction markets through applications, partnerships or their own platforms. Coinbase has partnered with Kalshi to offer event contracts through its trading platform.
What is still unclear
- Neither company's application amounts to authorization to begin offering the products, so a launch date is not known.
- Regulatory disputes remain a concern for prediction market operators, with Michigan regulators saying Coinbase has agreed to stop offering event contracts to customers in the state.
Questions readers ask
Have Binance US and Blockchain.com been approved to offer prediction markets?
No. Both have applied to the CFTC, but neither application amounts to authorization to begin offering the products. Blockchain.com is seeking both a Designated Contract Market license and a Futures Commission Merchant license.
How large are prediction market trading volumes?
Combined trading volumes on Polymarket and Kalshi rose from $17 billion in January to $72 billion in September, an increase of more than 300%, according to figures cited by the Financial Times.
Why are crypto exchanges entering prediction markets?
Crypto exchanges are expanding their product offerings as falling cryptocurrency prices and weaker trading activity put pressure on revenue from traditional digital asset services. Spot crypto trading volumes fell 18% over the same period.
What else is Binance US planning?
Binance US is seeking up to $100 million in funding at around a $1 billion valuation to support expansion, and it plans to restore state money-transmitter licenses and offer products beyond spot trading.
