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On December 10, 2025, Gemini Space Station, Inc. (NASDAQ:GEMI) announced that the Commodity Futures Trading Commission (“CFTC”) approved the registration of its subsidiary—Gemini Titan, LLC—as a Designated Contract Market (“DCM”), making it the first crypto-native exchange to obtain the necessary regulatory license to operate a prediction market for U.S. retail investors.
Historically, prediction markets have faced substantial regulatory scrutiny in the United States, in part because of their resemblance to gambling. Obtaining CFTC registration requires implementing a robust compliance program, governance controls, market surveillance, clearing arrangements and customer protections to safeguard market integrity, ensure fair access, and protect customer assets. This rigorous framework (based on futures markets regulations) helps explain why only a few platforms have obtained CFTC registration to operate prediction markets in the U.S. and underscores the significance of Gemini's achievement.
Background and Regulatory History
Prediction markets allow participants to bet on the outcome of future events. Participants speculate on a wide variety of real-world events such as elections, sports outcomes, geopolitical events, regulatory decisions, monetary and other policy decisions, stock exchange indices, foreign currency exchange rates, and corporate earnings. Prediction markets function similarly to futures markets, but the underlying is a future event, rather than a physical or financial asset.
Participants (which, depending on the platform may be retail or institutional) trade public “event contracts” with payouts based on a binary outcome (e.g., “yes”/“no”, “over”/“under”) of a reference event or tied to a range of possible outcomes along a spectrum or continuum (e.g., index contracts, spread contracts). For example, a contract may cost $40 and pay $100 if a given political candidate wins an election, implying the candidate has a 40% chance of winning.
Prediction markets are not a recent development. The Iowa Electronic Market, established in 1988, is the oldest real-money prediction market in the U.S. and operates as an academic research platform under CFTC no-action relief, with a focus on political outcomes. Similarly, PredictIt launched in 2014 as an academic research-focused prediction market, also operating under CFTC no-action relief. While these platforms enabled public trading (mainly on political events), their research-focused purpose historically required them to impose strict limits on contract size, account balances and total market scale, constraining broader retail participation and effectively precluding institutional involvement.
Building on this foundation, in 2021, Kalshi, Inc. became the first fully regulated U.S. prediction market when its registration as a DCM was approved by the CFTC, allowing U.S. retail participants to trade event contracts directly on its platform (and, once its affiliate Kalshi Klear LLC became registered as a Derivatives Clearing Organization (“DCO”) in 2024, to clear their trades through the same marketplace and trading infrastructure).
Until recently, other popular prediction markets, such as Polymarket, operated primarily offshore and geofenced their platforms to prevent U.S. participants from trading directly. In 2024, however, Polymarket acquired QCX LLC and QC Clearing LLC, both CFTC-licensed DCM/DCO entities, allowing it to operate as a regulated U.S. exchange with intermediated access through licensed brokerages or FCMs. Its U.S. offering is fully centralized and cleared, with surveillance and reporting obligations, similar to any other DCM. While Polymarket's global platform retains blockchain settlement mechanics, its U.S. market integrates entirely into traditional financial rails.
Meanwhile, Robinhood initially offered U.S. users access to prediction markets via third-party DCMs such as Kalshi. Its 2025 acquisition of MIAX Derivatives Exchange (MIAXdx) with Susquehanna gives Robinhood its own regulated exchange and clearinghouse. This allows Robinhood to list and clear prediction markets and other derivatives directly, rather than relying on partners.
Notably, however, these platforms have operated as centralized exchanges with contract listing, resolution, settlement and clearing handled through traditional infrastructure (i.e., “off-chain”, fiat-collateralized/settled, centralized clearing, etc.). By contrast, some newer prediction markets operate on-chain (at least in part) using blockchain-based self-executing “smart contracts” to automate aspects of trading, settlement and clearing on either a centralized or decentralized (or hybrid) basis. To date, none of these blockchain-based exchanges provide access to U.S. investors, as doing so would require CFTC registration (as a DCM and potentially as a Derivatives Clearing Organization (“DCO”)) under the traditional centralized framework, requiring extensive KYC/AML procedures, real-time monitoring, market surveillance/oversight, centralized governance and custody of customer assets and, with limited exceptions, intermediation through regulated Futures Commission Merchants (which may not be compatible with decentralized, on-chain operations).
Putting It Into Practice:
Gemini's successful navigation of the CFTC's approval process demonstrates both the growing maturity of the broader digital assets space and the increased sophistication of compliance programs at established digital asset exchanges. It also shows the CFTC, may be willing to integrate well-capitalized, compliant crypto-native firms into the regulated framework for event contracts, signaling a broader openness to prediction markets and crypto businesses generally (particularly if the newly confirmed chairman continues to reflect the priorities of the interim leadership that oversaw Gemini's approval).
Gemini Titan operates as a centralized exchange with fiat-collateralized event contracts, traditional clearing, centralized custody, and standard KYC/AML requirements. It is structurally similar to Kalshi and other existing DCM-registered prediction markets in that it is not decentralized or blockchain-native (for U.S. investors) and will offer the same types of binary markets with similar settlement mechanics. In effect, the various platforms (Gemini, Kalshi, Polymarket, and Robinhood) occupy different regulatory and commercial paths to the same endpoint: allowing U.S. participants (retail or institutional, depending on the platform) to trade event contracts (denominated and settled in fiat) on a centralized platform.
Looking forward, the CFTC's greenlight could open the door to greater innovation and mainstream adoption of prediction markets. The CFTC's recent approvals of registration by Gemini and other digital asset exchanges could signal that the current administration is open to granting more DCM licenses to digital asset exchanges offering prediction market services. While Gemini's registration does not transform product offerings, settlement mechanics or market structure, it may encourage the launch of additional platforms in the United States, as well as provide an opportunity and incentive for offshore digital asset exchanges to operate in the United States with regulatory approval. These developments may also signal to investors that prediction markets are legitimate financial products. As U.S. regulators continue to clarify their positions, entities operating in digital assets should remain vigilant, collaborative, and ready to adapt to evolving expectations.
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