Key Takeaways

• Senator Blumenthal hinted at probing the CFTC for allegedly favoring prediction platforms like Kalshi.

• Reports suggest Kalshi pressured the CFTC over delayed approvals for its new crypto perpetual futures.

• This sparks consumer protection fears and adds to Wall Street’s fight against CFTC stock perpetuals.

Senator Blumenthal Calls for Congress to Take Action Against Prediction Market Platforms

Congress is taking a closer look at the regulatory developments concerning prediction market platforms such as Kalshi and Polymarket, and how these could have been favored by federal watchdog action under the Trump Administration.

Senator Richard Blumenthal, a Democrat from Connecticut, is now hinting at a congressional probe into the alleged links between the Commodity Futures Trading Commission (CFTC) and prediction market platforms after reports indicated that Kalshi was ready to launch perpetual futures even after the regulator greenlit them.

A WSJ article claims that Kalshi had to cancel a gathering at a Brooklyn luxury penthouse when the CFTC did not “move fast enough” to announce that the platform was approved to launch these new perpetual futures. This allegedly prompted a follow-up call from Kalshi CEO Tarek Mansour to CFTC Chairman Michael S. Selig to complain about the situation, with three people with knowledge of the call who spoke on the condition of anonymity to describe a private conversation quoted as sources.

Blumenthal claims this report might be indicative of an unhealthy compromise between the regulator and prediction market companies.

“More strong signs that the CFTC is in prediction market pockets—as it approves sweeping new gambling on stock prices, cryptocurrencies, & more,” Blumenthal stated on social media channels.

“It puts the public in deep peril, setting consumer protection way below industry profits in priority. Time for Congress to act,” Blumenthal concluded, hinting at deeper congressional oversight on this issue.

Blumenthal has probed the crypto industry before, sending letters to Tether to clarify its links to the Trump Administration through a series of millionaire payments made to Nxum, a consulting firm co-founded by Bo Hines, who operated as a digital asset policy advisor for the White House.

These perpetual futures, which allow users to bet on the rise or fall of any cryptocurrency with no expiration date and without exposure to the underlying assets, have become a large part of Kalshi’s activity, registering $5.5 billion in trading two weeks after their May launch.

As the CFTC expands these perpetuals to include U.S. stocks, it is facing opposition from traditional finance exchange giants, which have filed a lawsuit under the Capital Markets Alliance’s (CMA) umbrella alleging that these products must be under the oversight of the Securities and Exchange Commission, as they behave more like security swaps than commodity futures, lacking a fixed expiry date.