CFTC issues no-action relief, clearing Bitnomial to offer event contracts

Divisions within the U.S. Commodity Futures Trading Commission have given the green light for crypto-focused exchange Bitnomial to offer event contracts.

On Thursday, the CFTC’s Division of Market Oversight and the Division of Clearing and Risk issued a no-action letter to Bitnomial Exchange, LLC, meaning that the agency would not recommend an enforcement action against the exchange for failing to comply with specific requirements.

Bitnomial said it wanted to list “among other products, binary and bounded swaps referencing digital assets, economic indicators, and financial outcome,” and said those were “fully collateralized,” in its request to the agency. The exchange will have to follow certain conditions, including publishing sales data and certain recordkeeping and reporting requirements, the CFTC said.

Over the past month, under previous CFTC Acting Chair Caroline Pham, the CFTC granted several go-ahead to firms looking to enter the prediction market arena. In December, the CFTC approved Gemini Titan to begin offering classic binary event contracts and could later expand into other derivatives markets such as crypto futures, options, and perps. The CFTC also issued no-action letters for Polymarket US, MIAX Derivatives Exchange LLC, and others.

Bitnomial also became the first exchange in December to list regulator-approved spot cryptocurrency products.

Prediction markets like Polymarket and Kalshi have grown in popularity over the past year, especially during the 2024 election cycle, as they allowed people to use crypto to wager on the outcomes of specific races, including who would be president.

Prediction markets have come even more into the spotlight as of this week, following reporting from Axios that revealed a Polymarket account wagered that Venezuelan President Nicolás Maduro would be “out” by the end of this month, netting $400,000, sparking concerns of insider information.

Republican Michael Selig took on his new role as CFTC chair in late December, leaving him as the sole commissioner at the agency. He has spoken about the need for clearer rules for crypto, while balancing consumer protection and allowing software developers to innovate.