CFTC
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The Commodity Futures Trading Commission (CFTC) is reviewing Crypto.com’s sports betting predictions contract product just a few weeks after launch.

In an announcement on Tuesday (14 January), the regulator stated that it is reviewing two of the contracts self-certified and submitted by Crypto.com on 19 December, with its sports predictions product launching four days later on 23 December.

Crypto.com has been asked to suspend its sports contract product while the CFTC continues its review. 

The regulator has so far concluded that the contracts may breach the Commodity Exchange Act and is assessing whether the products could be seen as a form of betting. There is the possibility that the review could end with Crypto.com being told to permanently remove the sports contract product.

The two contracts under review relate respectively to the ‘association participants’ in a title event such as the National Football League (NFL) or the National Hockey League (NHL), and to the town that hosts a celebration for an ‘association participant’ – this could mean the town or city where a winning sports team is located.

Crypto.com’s product is only available for trading of sports predictions on Super Bowl events, with the NFL’s concluding game scheduled for 9 February. The product’s launch raised questions as to when trading can be considered betting, as customers would be effectively placing wagers on the outcome of a match.

The main difference between Crypto.com’s product and a typical sportsbook proposition, as seen offered by the likes of US betting market leaders FanDuel, DraftKings and BetMGM, is that the crypto exchange’s product allows its users to trade and sell their ‘event contracts’ i.e. sell their prediction and potential winnings to another user.

“This unique financial product allows users to trade their prediction on the outcome of a sports event,” Kris Marszalek, Crypto.com CEO, said at the time of the product launch last month. 

“It’s a fundamentally new concept for sports, and we’re thrilled to be the first regulated platform in the US to offer it to our users.”

The sports betting industry has exploded in the US over the past seven years ever since the federal legislation preventing states from launching regulated betting markets, PASPA, was repealed by the Supreme Court in 2018.

In parallel to this, the US crypto sector is also enjoying sustained growth. It is estimated that around one fifth of American adults own some form of crypto, though some industry reports put this figure much higher. The value of cryptocurrencies has also surged in recent years, driven in part by regulatory and political developments.

Crypto.com’s sports contracts proposition is indicative of the strengthening links between the gaming and crypto fields, though as it stands no legal sportsbook in the US (FanDuel, DraftKings, BetMGM etc) accept bets using cryptocurrency.

A Crypto.com statement provided to Payment Expert read: “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.

“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.”