Gemini Receives CFTC License for US Prediction Markets

• Gemini Titan receives CFTC license to offer prediction markets to US users.
• Stock surges 14% after-hours following the regulatory approval announcement.

Gemini,​‍​‌‍​‍‌​‍​‌‍​‍‌ a cryptocurrency exchange, got the green light from the regulator to introduce prediction markets in the U.S. This is a notable development in the company’s business operations. The Gemini Titan, an affiliate of the company, was granted a license for a designated contract market by the Commodity Futures Trading Commission, which makes it possible for the company to provide the clients with the trading of event-based contracts. After the news was made public, the price of Gemini’s shares went up by almost 14% in the after-hours trading and reached $12.92 per share, while the market was not doing well ​‍​‌‍​‍‌​‍​‌‍​‍‌earlier.

Five-Year Journey Culminates in Market Entry

The​‍​‌‍​‍‌​‍​‌‍​‍‌ approval of the license marks the end of a detailed regulative procedure which, as per Gemini CEO Tyler Winklevoss, had started in March 2020. American users will be able to purchase event contracts via Gemini’s online platform, thus they will be able to speculate on various outcomes such as sports and political events. Besides that, the exchange is willing to expand its derivatives portfolio by adding crypto futures, options, and perpetual contracts for U.S. traders. 

Gemini President Cameron Winklevoss was upbeat about the industry’s potential, indicating that prediction markets might become as large, or even larger, than traditional capital markets. The optimistic outlook of the sector comes as a result of platforms like Polymarket and Kalshi experiencing record-breaking trading volumes in November, thus indicating the increasing consumer interest in event-based wagering. 

Kalshi recently secured a massive $1 billion funding round, thus reaching an $11 billion valuation and thereby demonstrating investor confidence in the prediction market sector. ​‍​‌‍​‍‌​‍​‌‍​‍‌

Regardless,​‍​‌‍​‍‌​‍​‌‍​‍‌ the sector encounters some problems related to regulations as several state authorities have escalated enforcement actions against CFTC-regulated platforms that are accused of running unauthorized sports betting operations. Those opposing the idea say that these platforms are just gambling services, and this raises questions regarding the protection of consumers and regulatory supervision of the new market segment. 

The Gemini prediction markets proposal is to be seen as part the overall strategy of the company to build a comprehensive crypto super app with various financial products. The crypto company founded by billionaire twins Tyler and Cameron Winklevoss, the firm is a potential competitor to other crypto platforms which are gradually becoming more than just trading services. Recently, Trust Wallet unveiled its prediction markets feature, and Coinbase seems to be working on a similar platform in collaboration with ​‍​‌‍​‍‌​‍​‌‍​‍‌Kalshi.

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