- The Commodity Futures Trading Commission announced a review of Crypto.com’s sports event contract offerings
- The commission will look at two of the offered sports event contracts
- The commission has requested Crypto.com pause its offerings on the two contract during the review
The Commodity Futures Trading Commission announced it will review two of Crypto.com’s sports event contract offerings.
Crypto.com, which is regulated by the Commodity Futures Trading Commission (CFTC), announced in December it would allow users to buy “contracts” to determine if teams will win or lose the NFL conference championship, certain college bowl games, and the college football national championship.
The CFTC initiated its review on Dec. 19, 2024, for contracts offered by Crypto.com based on the winner of a league championship and the hometown that will host a championship celebration, such as a parade, for its winning team.
Potentially an Excluded Commodity
The CFTC announced the contracts being offered by Crypto.com may involve a prohibited commodity in CFTC Regulation 40.11(a) and section 5c(c)(5)(C) of the Commodity Exchange Act. This specifically notes that registered entities shall not list for trading or accept contracts that involve “terrorism, assassination, war, gaming, or an activity that is unlawful under any state or federal law.”
The commission requested that Crypto.com cease its trading on these two contract types during the review, but a Crypto.com spokesperson noted in a statement to Sports Betting Dime it would continue to offer the contracts.
“We remain committed to working with the CFTC and will continue to support our customers and the trading of our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification,” the spokesperson said.
Crypto.com’s sports event contract service is similar to other event contracts offered by the company, part of its derivative offerings, which is a CFTC-regulated exchange.
The service allows users to purchase “contracts” for various prices. For example, a current contract on the Kansas City Chiefs to win the Super Bowl is trading for $32.75. Each contract that has a correct outcome returns $100, according to the company.
Because the service is regulated by the CFTC, Crypto.com can offer the contracts immediately to users through every state in the country.
“It is disappointing that the current and imminently departing CFTC leadership would take this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration. The majority’s decision to apply this rule contradicts recent Federal Court rulings and conflicts with the current Commission’s own statement set forth in its recent rule proposal,” the spokesperson said.
Expanded Offerings from Crypto.com
The company announced its initial offerings, contracts on the winner of the Super Bowl, in December. Last week, the company announced it would expand its offerings, with users able to also buy “contracts” to determine if teams will win or lose the NFL conference championship, certain college bowl games, and the college football national championship.
Because the service is regulated by the CFTC, Crypto.com can offer the contracts immediately to users through every state in the country. The service is not beholden to the sports betting tax rates that operators have to pay in each market they’re licensed, but it is subjected to certain requirements by the CFTC to ensure a regulated market for its traders.
The Commodity Futures Trading Commission (CFTC) has recently announced that it will be conducting a review of Crypto.com’s sports contract offerings. This move comes as part of the agency’s ongoing efforts to regulate the rapidly growing cryptocurrency market and ensure that investors are protected from potential risks.
Crypto.com, a popular cryptocurrency exchange and trading platform, has been offering sports contracts that allow users to bet on the outcome of various sporting events using digital assets. While these contracts have gained popularity among crypto enthusiasts, they have also raised concerns about their legality and potential for manipulation.
The CFTC’s review will focus on whether Crypto.com’s sports contracts comply with existing regulations governing derivatives trading. The agency will also examine whether the platform is adequately disclosing the risks associated with these contracts to investors.
This review is part of a broader effort by the CFTC to crack down on fraudulent and deceptive practices in the cryptocurrency market. In recent years, the agency has taken action against several companies for offering illegal derivatives products or engaging in market manipulation.
Investors in Crypto.com’s sports contracts should be aware of the potential risks involved in trading these products. While they may offer an exciting opportunity to profit from sporting events using cryptocurrency, they also carry a high level of risk due to their speculative nature and potential for price manipulation.
As the CFTC continues its review of Crypto.com’s sports contract offerings, investors should exercise caution and conduct thorough research before participating in these markets. By staying informed and vigilant, investors can protect themselves from potential losses and ensure that they are trading in a safe and compliant manner.
