Gemini has received the green light from the Commodity Futures Trading Commission (CFTC) to venture into prediction markets, marking a significant regulatory success for the firm, especially as its stock price remains over 50% lower than its initial public offering (IPO) valuation.
This license empowers Gemini Titan, the derivative division of the company, to function as a Designated Contract Market and to list event contracts within the United States.
The authorization concludes a review process that started with Gemini’s application in March 2020. “Today’s approval signifies the end of a five-year licensing journey and opens a new chapter for Gemini,” stated CEO Tyler Winklevoss, highlighting that the filing was initially submitted in March 2020.
On Wednesday during after-hours trading, Gemini’s stock experienced a 10.8% increase. The company has navigated a challenging inaugural year in public markets following its New York listing in September.
Insights on Event Contracts and Market Strategies
The license enables Gemini Titan to create prediction markets centered around binary questions regarding future events. Gemini noted potential examples could include queries like: “Will the price of 1 Bitcoin exceed $200,000 by year-end?” or “Will Elon Musk’s X fulfill the $140 million European Commission penalty by 2026?”
These contract types are akin to those provided by Crypto.com, Kalshi, and Polymarket. Although Gemini hasn’t disclosed a launch date, it indicated that access would commence “soon.” Initially, U.S. customers will engage via the web platform, with mobile trading options to follow.
Gemini President Cameron Winklevoss remarked, “Prediction markets possess the potential to rival or even surpass traditional capital markets.”
A federal court decision last year lifted a CFTC ban on election contracts, encouraging more firms to enter this space. Fanatics recently disclosed efforts towards establishing a new prediction market, while Robinhood and Susquehanna completed a purchase of LedgerX in November.
Future Development of Derivatives
Gemini is also exploring the introduction of additional derivatives for U.S. clients. “In the future, Gemini Titan intends to broaden its derivatives offerings for U.S. customers, potentially including crypto futures, options, and perpetual contracts,” the company stated, noting the popularity of perpetuals in Asia and other international markets over the last decade.
Interestingly, Gemini did not specify intentions for sports markets in its plans. Other players, including Cboe, have similarly steered clear of that arena due to legal complications surrounding sports-related derivatives across various platforms.
This approval arrives while crypto-related prediction markets are seeing rising interest from trading platforms. Crypto.com and Polymarket have already carved out significant positions in this sector, with reports suggesting Polymarket is considering launching a digital currency offering.
The Winklevoss twins, who are known for holding 70,000 Bitcoins, linked this regulatory development to broader shifts in federal policy. “We appreciate President Trump for concluding the Biden Administration’s opposition to crypto and Acting Chairman Pham for her dedication to actualizing President Trump’s vision of making America the global hub for cryptocurrency,” concluded Tyler Winklevoss. “It is invigorating to witness a President and financial regulator who are pro-crypto, pro-innovation, and pro-America.”