CFTC Certifies First Crypto-Native Exchange as a Designated Contract Market

Prediction markets have long occupied an uneasy position in U.S. financial regulation. While they function economically like futures markets by allowing participants to trade contracts tied to future outcomes, they have historically drawn scrutiny because of their perceived resemblance to gambling.

As a result, Sheppard Mullin points out in an analysis of the Gemini development, the CFTC has applied a cautious approach. The agency has required any platform seeking registration as a DCM to meet the same core standards imposed on traditional futures exchanges, including robust compliance and governance programs, market surveillance, clearing arrangements, and customer protections.

Early U.S. prediction markets such as the Iowa Electronic Market and PredictIt were permitted to operate only under CFTC no-action relief and were limited to academic research purposes. Those conditions required strict caps on contract sizes, account balances, and overall market scale, effectively preventing broad retail or institutional participation.

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The first fully regulated U.S. prediction market did not emerge until 2021, when Kalshi received DCM approval, followed by registration of its affiliated clearinghouse in 2024. Even then, per Sheppard Mullin, participation and market structure were firmly embedded within traditional, centralized financial infrastructure.

Against this backdrop, Gemini Titan’s registration represents a notable expansion of the CFTC’s willingness to license new entrants, including firms that originate in the crypto sector. Notably, however, the approval does not reflect a wholesale embrace of decentralized or blockchain-based market structures for U.S. prediction markets.

Gemini Titan will operate as a centralized exchange offering fiat-collateralized event contracts, with conventional clearing, centralized custody, and standard know-your-customer and anti-money-laundering requirements. For U.S. users, the platform will resemble existing DCM-registered prediction markets rather than decentralized, on-chain systems that rely on smart contracts for settlement and clearing.

Sheppard Mullin situates Gemini’s approval alongside other recent developments that highlight converging regulatory paths. Offshore platforms such as Polymarket historically excluded U.S. users, but have moved toward compliance by acquiring CFTC-licensed entities and offering U.S. access through intermediated, fully centralized models. Similarly, Robinhood’s acquisition of a regulated derivatives exchange and clearinghouse positions it to list and clear prediction markets directly, rather than through third-party platforms. In each case, regulatory acceptance has required alignment with the CFTC’s centralized oversight model, even where the firms maintain blockchain-based operations elsewhere.

Gemini’s success illustrates both the maturation of compliance capabilities within established digital asset firms and a potentially more pragmatic posture at the CFTC. It suggests that well-capitalized, compliant crypto-native exchanges can satisfy the agency’s expectations, provided they conform to existing statutory and regulatory requirements. At the same time, the decision draws clear boundaries around what is currently will be permitted. Decentralized, non-custodial prediction markets remain incompatible with the CFTC’s DCM and clearing framework, particularly given requirements for centralized governance, surveillance, and custody.

For the digital assets industry, the message is twofold: regulatory access is achievable, but only through adherence to traditional market structures and compliance expectations. As federal oversight of both derivatives and digital assets continues to evolve, Gemini’s approval stands as a case study in how crypto-native firms can enter regulated U.S. markets without fundamentally reshaping the underlying regulatory architecture.