Kalshi Weighs Move Into Non-Expiring Derivatives Space

Prediction market Kalshi is reportedly eyeing a move into the derivatives space.

This expansion would cover things like metals, foreign exchange and energy markets, a company executive told Reuters in an interview published Thursday (July 9).

The plan is to compete against traditional exchange operators by offering perpetual futures which, unlike traditional derivatives contracts, have no expiration date, the report said.

Kalshi launched the country’s ‌first perpetuals futures contracts for crypto trading in May, and is now seeking permission from the Commodity Futures Trading Commission (CFTC) to launch those offerings ⁠in other asset classes, ⁠said Udesh Jha, chief risk officer at Kalshi.

In addition to crypto, “the other asset classes that we’re looking at are very much driven by the ​market, for instance, things like gold,” Jha said, adding that Kalshi is in talks with regulators to get permission to expand to other asset classes like foreign exchange and energy.

“Gold is something that’s coming up because it’s retail friendly,” he said. “Our participants skew towards the retail side, but also institutional.”

As Reuters notes, perpetual futures contracts (perps) are futures contracts without expiration ​dates, meaning investors can indefinitely hold positions in an asset instead of closing them out or rolling them over.

Critics warn these contracts are risky for retail investors who might not understand their complexity and could suffer steep losses if prices shift against them ⁠even a little.

Derivative exchange CME’s outgoing CEO Terry Duffy in June criticized the CFTC for permitting the rollout of perps, calling them a “disaster waiting to happen.” That company has since sued the CFTC, challenging its decision to allow Kalshi and cryptocurrency exchange Coinbase to list perpetual futures.

Jha told Reuters Kalshi is also considering an expansion into perpetual futures tied to broad-based indexes and individual stocks. Perpetual contracts have accounted for trading volumes of $16.1 billion since those derivatives appeared on Kalshi.

In other Kalshi news, a federal judge this week denied the company’s request for a preliminary injunction keeping New York from subjecting the platform to state gambling laws. The company had argued the federal Commodity Exchange Act trumps state gambling laws, and appealed the decision, Reuters reported.

“New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court,” New York Gov. Kathy Hochul and Attorney General Letitia James said in a statement.

“We will continue to hold all gambling platforms accountable to the law—and that includes prediction markets.”