CFTC Opens Door to Regulated Spot Bitcoin Trading as State Regulators Push Back on Prediction Markets

Federal Regulators Approve Spot Bitcoin Trading Framework

The U.S. Commodity Futures Trading Commission (CFTC) is preparing to permit spot Bitcoin and other digital assets to trade under federal regulation for the first time, marking a significant shift in cryptocurrency market oversight ^[1].

Acting Chairman Caroline Pham announced that spot Bitcoin and crypto products will now be eligible for listing on CFTC-registered markets, aligning with the launch of Bitnomial Inc.'s exchange scheduled to go live during the week of December 8th, 2025 ^[1].

Bitnomial will introduce leveraged spot Bitcoin and crypto trading through its Designated Contract Market and Derivatives Clearing Organization, offering spot, perpetuals, futures, and options in one venue ^[1]. "Leveraged spot crypto trading is now available under the same regulatory framework as U.S. perpetuals, futures, and options," said Luke Hoersten, Bitnomial's founder and CEO ^[1].

Protecting U.S. Traders From Offshore Platforms

Pham described the framework as an effort to provide U.S. traders with regulated options instead of offshore platforms. Citing the collapse of FTX, she stated that "Americans [should] come back home to trade where they have the protections they deserve" ^[1].

The CFTC emphasized that all orders on Bitnomial's exchange, whether retail or institutional, will be treated equally without preferential routing ^[1]. The agency also noted that the structure simplifies compliance for brokers that previously faced state-level licensing hurdles.

Under the updated approach, certain retail commodity transactions can trade on a Designated Contract Market and clear through a Derivatives Clearing Organization, establishing a compliant avenue for leveraged spot trading in the United States ^[1].

State Regulators Challenge Prediction Markets

While federal regulators expand crypto market access, state authorities are pushing back against prediction market platforms. Connecticut's Department of Consumer Protection has ordered Kalshi, Crypto.com, and Robinhood to halt their prediction market operations in the state, claiming they operate without proper licenses ^[2].

DCP Commissioner Bryan Cafferelli stated that none of the platforms had necessary licenses to offer prediction markets in Connecticut, adding that "their contracts violate numerous other state laws and policies," including allowing individuals under 21 to place bets on events ^[2].

DCP Gaming Director Kris Gilman accused the platforms of "deceptively advertising that their services are legal," noting they operate outside the state's regulatory environment and pose "a serious risk to consumers who may not realize that wagers placed on these illegal platforms offer no protections for their money or information" ^[2].

Platforms Assert Federal Jurisdiction

Both Kalshi and Robinhood pushed back against Connecticut's orders, asserting federal regulatory authority. A Kalshi spokesperson stated the platform is "a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction" ^[2]. The company filed a complaint claiming Connecticut's action "intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges" ^[2].

A Robinhood spokesperson similarly noted that "Robinhood's event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity" ^[2].

Kalshi faces similar challenges from multiple states, having received cease-and-desist orders from Arizona, Illinois, Montana, Ohio, and New York this year, while remaining in ongoing litigation in New Jersey, Maryland, and Nevada ^[2].

Polymarket Returns to U.S. Market

The regulatory developments coincide with Polymarket's re-entry into the U.S. market through its $112 million acquisition of CFTC-licensed QCEX ^[1][2]. The platform, which previously exited the U.S. as part of a CFTC settlement agreement, has implemented updated surveillance, reporting, and clearing systems to meet regulatory standards and now accepts Bitcoin deposits in addition to stablecoins ^[1].

Despite regulatory challenges, Kalshi announced this week it closed a $1 billion funding round at an $11 billion valuation ^[2].