Prediction market platform Kalshi has filed with the Commodity Futures Trading Commission (CFTC) for approval to launch perpetual futures contracts on gold, silver, and platinum. The move is part of its strategy to expand beyond crypto.
Kalshi has recorded $16.1 billion in trading volume since launching crypto perpetuals. However, its ambition to expand beyond crypto could face delays after the CME Group sued the CFTC over the approval.
Kalshi Plans Expansion Beyond Crypto Perpetuals
Reports about Kalshi’s intention to expand its perpetual futures offering into traditional markets emerged earlier this month. The reports stated that the prediction market platform is in discussions with regulators about contracts tied to metals, energy, and foreign exchange. Under the current review process, the CFTC has 45 days to approve or reject the filing. If approved, the perpetual futures contracts will initially operate 24 hours a day for five days a week. This means the contracts would match the trading hours of the underlying asset, unlike the platform’s crypto perpetuals that trade 24/7. However, the hours will depend on market demand.
Udesh Jha, Chief Risk Officer at Kalshi, stated that the platform is also exploring expansion into other asset classes, including equities and foreign exchange. Jha identified gold as one of Kalshi’s target markets because of strong retail demand. He also added that the company is discussing other asset classes with regulatory authorities. Jha highlighted strong investor interest in FX, energy, and metals.
Growing Competition
Kalshi’s push into markets beyond crypto comes as competition between traditional financial venues, prediction markets, and cryptocurrency exchanges is heating up. Hyperliquid has expanded its perpetual trading operations into commodities, while CME Group is pushing for longer trading hours for traditional futures products. However, CME Group has faced regulatory pushback, with the CFTC delaying its proposal for 24/7 crude oil futures pending additional reviews.
The CME Group Lawsuit
Kalshi’s expansion plans could be delayed because of CME Group’s lawsuit challenging the CFTC’s approval for Kalshi’s products. If the outcome is in CME’s favor, it could hamper Kalshi’s expansion. The outcome will also clarify whether the CFTC views perpetual futures as a legitimate product under currency regulatory standards. CME believes the products must be regulated as swaps, not futures. However, it suffered a recent setback after Jenner & Block withdrew from representation because of a conflict of interest. Aitan Goelman, former CFTC enforcement chief, has taken over the case.
Kalshi has suffered a separate legal setback of its own, with US District Judge Analisa Torres denying a preliminary injunction to block New York’s gambling laws against its sports-event contracts.
Perpetual futures contracts do not have an expiry date, allowing traders to hold their positions indefinitely (perpetually). These contracts use a “funding rate” to keep the contract price tethered to the underlying product’s spot price.
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