CFTC Issues Key No-Action Letters on Data Rules for Prediction Markets and Derivatives
The U.S. Commodity Futures Trading Commission (CFTC) has issued a significant round of No-Action Letters to four major operators in the derivatives and prediction market space: Polymarket, Gemini, PredictIt, and LedgerX/MIAX. Issued on Thursday, December 11, 2025, these letters provide targeted regulatory relief from certain swap-related recordkeeping and data reporting requirements, signaling the CFTC's increasingly flexible and supportive approach to bringing innovative crypto-native products under a regulated federal framework. The action is a major boost particularly for the burgeoning prediction market sector, offering key regulatory clarity to operators like Polymarket and Gemini just as competition in the space is set to intensify.
The Significance of the Regulatory Relief
A No-Action Letter is a formal statement from the regulator that staff will not recommend enforcement action against a company for non-compliance with a specific rule, provided the company adheres to alternative, specified requirements. In this instance, the relief pertains to certain swap-related recordkeeping requirements and the failure to report data to swap data repositories (SDRs), which are standard, often complex, mandates for derivatives trading platforms. The CFTC stated that this relief is designed to be comparable to no-action letters issued for other similarly situated Designated Contract Markets (DCMs) and Derivatives Clearing Organizations (DCOs). This move recognizes that the nature of fully-collateralized crypto derivatives and prediction contracts differs significantly from traditional interest rate or credit swaps.
However, the regulatory relief is strictly conditional, requiring the recipients to ensure that their contracts are fully collateralized at all times, meaning participants must post the entire required margin upfront. Furthermore, all clearing must be conducted internally through their designated platform, without reliance on external clearing members, and all data tied to the contracts must be publicly published on their platforms after execution, ensuring full transparency to market participants. This action allows these platforms to operate their event contracts and derivatives markets within a regulated environment while avoiding compliance with certain older, potentially unwieldy data reporting rules that were designed for traditional, high-volume, non-fully-collateralized swaps, ultimately lowering the operational cost of compliance.
Fueling the Prediction Market Gold Rush
The No-Action Letters are particularly crucial for the rapidly growing prediction market sector, where three of the four recipients—Polymarket, Gemini, and PredictIt—are primary players. The decision comes just after Gemini secured its official Designated Contract Market (DCM) license, allowing it to formally launch its prediction market platform, Gemini Titan. Polymarket, which acquired a CFTC-licensed exchange earlier this year and was previously fined and banned from the U.S. market, now has further regulatory clearance to operate event contracts for U.S. customers under a fully regulated model. PredictIt, which has been in a protracted legal dispute with the CFTC regarding the terms of its original relief, gains greater certainty on its operational requirements for its political event contracts. By providing clear guardrails and exemptions, the CFTC, under Acting Chair Caroline D. Pham, continues to position itself as a pro-innovation regulator, seeking to bring crypto-related derivatives activity onshore and under federal supervision. This regulatory clarity is expected to further accelerate the "gold rush" among platforms like Coinbase, DraftKings, and others who are actively angling for a piece of the lucrative U.S. prediction market business, promising to dramatically reshape the landscape of digital asset derivatives in the coming year.