U.S. Regulator Expands Crypto Trading To Online Platforms

The Commodity Futures Trading Commission (CFTC) is expanding the trading of cryptocurrencies and prediction markets to online platforms.

The CFTC is enabling crypto and prediction market trading via online platforms by exempting some software providers from registration requirements.

The Washington, D.C.-based regulator said that "passive software" providers that partner with regulated entities won't face enforcement penalties for failing to register as brokers, so long as they never take custody of a user's assets.

Typically, companies that accept trade orders, send them to commission merchants, and are compensated through fees have to register as brokers.

In March, the CFTC enabled Phantom Technologies to forgo the registration process because it partnered with Kalshi to bring prediction market trading to its 20 million crypto wallet holders.

Phantom laid the groundwork for platforms that never take custody of user's assets or make decisions related to their trades.

It's a business model that's being embraced by others in the crypto and prediction market space, including Crypto.com and Prophet, both of which operate CFTC-registered platforms.

Analysts say the new CFTC rule means that a prediction market and crypto trading can take place virtually anywhere.

The CFTC's new guidance comes after crypto market legislation sought by the industry was voted down in the U.S. Senate earlier in the week.

CFTC Chairman Michael Selig has said he intends to move forward with rules for the cryptocurrency industry in the absence of government legislation.