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US Court Blocks New Jersey From Regulating Kalshi Prediction Market

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A federal appeals court has ruled that New Jersey regulators cannot block Kalshi from offering its prediction market services in the state, marking a significant development in the legal battle over the regulation of event-based trading.

The 3rd U.S. Circuit Court of Appeals determined that oversight of Kalshi’s contracts falls under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), rather than state gaming authorities.

Kalshi allows users to trade contracts tied to real-world outcomes, including sports and political events. While states like New Jersey argue these resemble gambling and should be subject to local laws, Kalshi maintains that its products qualify as financial derivatives regulated at the federal level.

The court’s 2–1 decision sided with Kalshi, affirming that its event contracts are legally classified as “swaps” traded on a CFTC-approved platform. This classification effectively preempts state-level restrictions under existing federal law.

The ruling represents a key precedent in an ongoing nationwide dispute, as multiple states attempt to regulate or restrict prediction markets. Some courts have issued conflicting decisions, and further legal challenges are expected.

New Jersey officials have indicated they are reviewing their options, which could include seeking a rehearing. Meanwhile, the case underscores the growing tension between traditional gambling regulation frameworks and emerging financial-style betting platforms.

Kraken buys Small Exchange in $100 million deal to expand U.S. derivatives operations

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Crypto exchange Kraken has agreed to acquire Small Exchange from IG Group for $100 million, marking a major step toward building a fully U.S.-based derivatives platform that can serve both retail and institutional traders.

Small Exchange holds a Commodity Futures Trading Commission (CFTC) license as a designated contract market, giving Kraken access to a regulated venue for offering futures and options — products that have become central to the digital asset industry’s push for mainstream legitimacy.

“Under CFTC oversight, Kraken can now integrate clearing, risk and matching into one environment that meets the same standards as the largest exchanges in the world,” said Arjun Sethi, Kraken’s co-CEO.

The acquisition reflects a growing trend of digital asset firms entering traditional capital markets, as cryptocurrencies gain wider acceptance and investors demand more sophisticated risk-management tools. Analysts say institutional adoption is accelerating as regulated crypto derivatives gain traction.

“Digital asset firms are no longer content being sideshow players,” said Michael Ashley Schulman of Running Point Capital Advisors. “They aim to wrest seats in the core capital markets ecosystem.”

Kraken described the acquisition as a strategic move to establish “institutional-grade markets” as crypto matures under a more crypto-friendly regulatory climate in the U.S. under President Donald Trump.

Earlier this year, Kraken also announced a $1.5 billion deal to acquire NinjaTrader, another retail futures trading platform, strengthening its position in the fast-growing derivatives segment.

CFTC Moves to Permit Spot Crypto Trading on Registered Futures Exchanges

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The U.S. Commodity Futures Trading Commission (CFTC) announced plans to launch an initiative allowing spot trading of crypto asset contracts on futures exchanges registered with the agency. This effort aims to further integrate digital assets into traditional finance and could accelerate broader crypto adoption.

Acting Chair Caroline Pham explained that the CFTC will work alongside the Securities and Exchange Commission’s Project Crypto to enable federal-level trading of digital assets. The agency has opened a public comment period to gather input on how to designate spot crypto asset contracts for trading on regulated markets.

Industry leaders welcomed the move as a significant step toward aligning crypto markets with conventional financial standards. Saad Ahmed, head of Asia Pacific at Gemini, said the initiative could expand institutional and sophisticated investor participation worldwide.

The development follows several crypto-friendly actions by the Trump administration, including bills like the GENIUS Act and CLARITY Act aimed at creating tailored regulatory frameworks. Shortly after taking office, President Trump established a crypto working group tasked with recommending new regulations, fulfilling his campaign pledge to overhaul U.S. crypto policy.

Last week, the administration released a landmark report urging the SEC to implement specific rules for digital assets and encouraged the CFTC to use its existing powers to “immediately enable” federal digital asset trading. Trump, who branded himself the “crypto president” during his campaign, received substantial financial support from the crypto industry and Republican congressional candidates.

SEC Chair Paul Atkins recently outlined multiple pro-crypto initiatives, including developing clearer guidelines on when a crypto token qualifies as a security and proposals for disclosure and exemption rules.

The dual approach by the CFTC and SEC marks a victory for the crypto sector, which has long sought tailored regulations. It may also benefit exchanges, which have dominated spot trading by operating in a regulatory gray area.

Joseph Edwards, head of research at Enigma Securities, expressed optimism that a wider range of digital assets beyond Bitcoin and Ethereum could establish themselves on U.S. trading platforms over the next two years, aided by initiatives like this.

However, the success of these initiatives hinges on resolving fundamental questions about whether digital assets should be regulated as commodities or securities—a longstanding issue for U.S. regulators.

Neither the CFTC nor the SEC has provided further comments yet.

This shift under the Trump administration sharply contrasts with the Biden administration’s regulatory crackdown, which has included lawsuits against major exchanges such as Coinbase and Binance for alleged violations of U.S. laws. The Trump-era SEC has reportedly dropped these cases.