Only a few weeks after the launch of Crypto.com’s sports betting prediction feature last December, the US Commodity Futures Trading Commission (CFTC) has launched a review into the product. 

The CFTC confirmed its probe into Crypto.com’s sports prediction product on Tuesday (14 January) and is reviewing two of the self-certified contracts submitted by the cryptocurrency exchange from 19 December. 

Having only launched on 23 December, the US regulator has asked Crypto.com to suspend its sports contract product until its review is concluded.

The CFTC has so far deemed that the Crypto.com contracts could be in breach of the Commodity Exchange Act. The regulator is assessing whether the products could be viewed as a form of gambling as it closely associates itself with US sports leagues, such as the NFL and NHL, viewed as ‘associated participants’. 

This comes after the initial offering of the Crypto.com sports prediction product on the upcoming Super Bowl and relevant events associated with the NFL’s finale. The product’s launch raised questions as to when trading can be considered betting, as customers would be effectively placing wagers on the outcome of a match.

At the time of the launch, Crypto.com CEO, Kris Marszalek, stated that this product is a “fundamental concept for sports” and was cleared by regulators to launch. 

Marszalek stated in December: “This unique financial product allows users to trade their prediction on the outcome of a sports event. It’s a fundamentally new concept for sports, and we’re thrilled to be the first regulated platform in the US to offer it to our users.”

Crypto.com may argue that its prediction feature is not a typical sportsbook offering, as provided by the likes of FanDuel and DraftKings, as it is selling contracts in exchange of winnings if the user is successful. 

In a statement provided to SBC Americas, Crypto.com suggested that the CFTC’s actions contradict not only court rulings but its own past statements. It also sounds like the platform does not plan to suspend trading on sports contracts.

“It is disappointing that the current and imminently departing CFTC leadership would take this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration,” said a spokesperson. “The majority’s decision to apply this rule contradicts recent Federal Court rulings and conflicts with the current Commission’s own statement set forth in its recent rule proposal.

“We remain committed to working with the CFTC and will continue to support our customers and the trading of our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification.”

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