US CFTC issues "No-Action Letter" to four platforms including Polymarket, predicting collective easing of prediction market regulations

The U.S. Commodity Futures Trading Commission (CFTC) recently issued “No-Action Letters” to predict market platforms Polymarket, PredictIt, Gemini, and LedgerX simultaneously, allowing them to be exempt from certain rigorous record-keeping and data reporting requirements under specific conditions. This collective regulatory easing signal marks that prediction markets, long operating in a gray area, are beginning to receive limited acceptance from mainstream U.S. financial regulators. Coupled with developments such as Polymarket’s official return to the U.S., Gemini obtaining a designated contract market license, and Coinbase’s upcoming entry, a regulated on-chain prediction market track has become clearly visible. This is not only a major breakthrough for DeFi applications but could also reshape how people perceive information pricing and risk hedging in the future.

In-Depth Analysis of the CFTC “No-Action Letter”: The Olive Branch and the Red Line of Regulation

The CFTC, the highest regulatory authority for derivatives markets in the U.S., has recently given a relatively moderate yet clearly purposeful green light for the development of prediction markets. The agency issued “No-Action Letters” to four operators: Polymarket, PredictIt, Gemini, and LedgerX/MIAX. The core of these letters is that as long as these platforms comply with other stipulated requirements, the CFTC will refrain from taking enforcement action against them for not meeting certain swap-related recordkeeping obligations and for not reporting binary options trading data to swap data repositories. In short, the regulators are providing a temporary exemption in key data compliance areas, removing some operational barriers for these companies.

It’s important to note that “No-Action Letters” are not unconditional waivers. The CFTC explicitly emphasizes in its press release that these letters “apply only to narrow, specific circumstances,” and are comparable to previous letters issued to other designated contract markets and derivatives clearing organizations in similar situations. This qualification is crucial, indicating that the CFTC is not creating a new, lenient set of rules specifically for prediction markets but is managing them within the existing, mature derivatives regulatory framework through analogy. Essentially, the regulator is saying: “As long as you operate according to practices recognized by us and similar to other compliant exchanges, we will not bother you at this stage.”

The conditions set forth in the letters constitute the “rules of the game” that platforms must strictly follow. These include: ensuring all contracts are fully collateralized at all times; settlement of contracts must be done through their designated platforms; all relevant data must be publicly available on the platform after contract execution; and they must still meet certain swap recordkeeping requirements. These provisions aim to guarantee market transparency and solvency, protecting investors from platform misappropriation of funds or data manipulation. Therefore, this “No-Action Letter” resembles a regulatory “sandbox” experiment under close supervision, offering space for innovation while drawing clear safety boundaries that cannot be crossed.

The Battle for Market Supremacy: Polymarket, Gemini, Coinbase’s Strategies and Layouts

The subtle shifts in the regulatory environment have immediately triggered a chain reaction in the market, with major players accelerating their strategic moves. Polymarket, which had been forced to relocate overseas and pay a $1.4 million fine due to CFTC enforcement, has staged a “comeback.” Its strategy to re-enter the U.S. market has been carefully planned: first acquiring a licensed derivatives trading platform, QCX, in July 2025 to lay the regulatory groundwork; then quietly launching in beta mode in November; and finally officially releasing the U.S. version app on December 4, initially opening sports markets. This series of actions demonstrates its commitment to compliance, and the arrival of the “No-Action Letter” is undoubtedly a boost for its U.S. operations.

Another native crypto exchange, Gemini, has also made rapid progress. Its subsidiary, Gemini Space Station, Inc., officially received CFTC approval on December 11th to operate a designated contract market called Gemini Titan. This means Gemini is no longer just a trading platform but has upgraded to a fully regulated derivatives exchange, with a solid legal foundation for its prediction market business. Gemini has also revealed plans to expand into broader derivatives such as crypto futures and options, showing significant ambitions.

Equally noteworthy is the entry intent of industry giant Coinbase. According to Bloomberg, citing informed sources, Coinbase plans to announce the launch of its own prediction market and tokenized stock products at an event on December 17. Although its product roadmap remains unclear, with its large user base and brand influence, once launched, it is expected to have a disruptive impact on the entire competitive landscape. From Polymarket’s curve reestablishment, to Gemini’s licensed operations, to Coinbase’s preparations, a battle over “future information pricing rights” has quietly begun in the U.S. market.

Timeline of Recent Developments of Key Players in the U.S. Prediction Market

• July 2025: Polymarket acquires licensed platform QCX, paving the way for re-entry.
• November 13, 2025: Polymarket re-launches in the U.S. in beta mode.
• Early December 2025: CFTC issues “No-Action Letters” to Polymarket, Gemini, and two others.
• December 4, 2025: Polymarket official launches U.S. app, first opening sports markets.
• December 11, 2025: Gemini obtains CFTC’s DCM license, enabling operation of Gemini Titan prediction markets.
• Expected December 17, 2025: Coinbase plans to announce the launch of its prediction market product.

The Value Core of Prediction Markets: Why Do They Attract Regulatory and Industry Giants’ Attention?

Prediction markets are not new, but their integration with blockchain technology—especially seeking breakthroughs under U.S. regulatory frameworks—reveals their deep financial and social value. Essentially, prediction markets are a platform that aggregates dispersed information through trading “event outcome contracts.” Participants bet with real money on their predictions, and the resulting market prices often reflect the true probabilities of events more accurately than expert opinions or polls. This “crowd wisdom” financial expression was thoroughly validated during the 2024 U.S. elections, increasing the popularity of this sector.

For traditional finance and regulators, a compliant and transparent prediction market offers multiple attractions. Firstly, it can serve as a new risk hedging tool. Companies can hedge against fluctuations in raw material prices, exchange rates, and even geopolitical events. Secondly, it can generate highly valuable “forward-looking data”; the probability data derived from market trading has important reference value for policymakers, research institutions, and businesses. The gradual acceptance by the CFTC can be seen as a cautious recognition of this “information market” as a public good.

From the perspective of the crypto industry, legalization of prediction markets has strategic significance. It successfully transforms an application with a broad user base (involving sports, politics, entertainment) from niche DeFi “amusement” into a mainstream, regulated financial market. This provides an excellent “outreach” scenario for blockchain technology, likely attracting many non-native crypto users. Using stablecoins like USDC for trading, users can experience the efficiency and transparency of blockchain settlement seamlessly, which is a more practical and smoother form of market education compared to simply promoting Bitcoin or Ethereum investment attributes.

Challenges in the Path Toward Compliance and Future Investment Outlook

Despite the dawn of progress, the full path toward prediction market compliance in the U.S. remains fraught with obstacles. The primary challenge lies in legal classification. Are prediction market contracts “gambling,” “securities,” or “swaps”? The current approach through “No-Action Letters” and DCM licenses seems inclined to categorize them as “event contracts” or “binary options” for derivatives regulation, but this classification still faces broader legal scrutiny. Strict state bans on gambling remain a looming sword of Damocles over platforms.

Secondly, operational risks cannot be underestimated. The “full collateralization” and “data transparency” requirements emphasized in the letters impose high demands on platforms’ technical and risk management capabilities. A security breach caused by human error, like the LI.FI incident in July 2024, could not only result in user asset losses but also instantly destroy the fragile trust recently established by regulators. Moreover, issues such as market manipulation prevention, ensuring neutrality in event setup, and handling contentious events (e.g., involving current officials) require platforms to develop comprehensive mechanisms.

For market participants, this emerging track already shows clear early investment logic. In the short term, platforms with first-mover advantages and compliant layouts like Polymarket and Gemini are expected to benefit directly, with platform traffic and trading volume likely to grow with market opening. In the medium term, supporting infrastructure providers such as oracles, settlement layer protocols, and compliance tech providers will see increasing demand. Long-term, once the potential of prediction markets as “decentralized information engines” is fully unleashed, they could, like search engines and social media, spawn entirely new information access and decision-making paradigms, with much greater room for imagination than current “gambling” impressions.

CFTC’s issuance of the “No-Action Letter” is akin to the first domino falling, officially initiating the process of U.S. prediction markets transitioning from the fringes to the mainstream. This is not only a victory for several startups but also a milestone where the crypto world and traditional regulatory frameworks find a “great common divisor” in a specific application scenario. When Polymarket users place bets on a game or Gemini Titan traders price economic data, they are unwittingly participating in building a more efficient, transparent global information market. The cautious regulatory approval and the influx of giants together indicate that the true value of prediction markets—this game of “foreseeing the future”—may just be beginning to be priced.