Gemini (GEMI) Stock Jumps as Exchange Gains CFTC Approval for US Prediction Markets

TLDR

• Gemini received CFTC approval for a Designated Contract Market license to offer prediction markets in the US
• GEMI stock rose 13.7% in after-hours trading following the Wednesday announcement
• The crypto exchange completed a 5-year licensing process that began with an application in March 2020
• Gemini plans to launch event contracts and expand into crypto futures, options and perpetual contracts
• The move positions Gemini to compete with platforms like Kalshi and Polymarket in the growing prediction market sector

Gemini Space Station Inc stock climbed 13.7% in after-hours trading Wednesday after securing regulatory approval to launch prediction markets.

Gemini Space Station, Inc. Class A Common Stock, GEMI

The Commodity Futures Trading Commission granted a Designated Contract Market license to Gemini Titan, the exchange’s affiliate. This clearance allows Gemini to offer binary event contracts where users bet on future outcomes.

Shares reached $12.92 in extended trading after closing the regular session down 0.7%. The stock remains down 64.5% since going public on September 12.

Five Years in the Making

Gemini submitted its DCM license application on March 10, 2020. The approval concludes a multi-year regulatory review process.

The exchange will launch event contracts on its web platform for US users in the coming weeks. Gemini also announced plans to expand derivatives offerings to include crypto futures, options and perpetual contracts.

The company reported losses in its first quarterly earnings as a public company last month. Those losses stemmed from expenses related to going public.

Growing Competition in Prediction Markets

Gemini enters a space experiencing rapid growth. Polymarket and Kalshi both posted record monthly trading volumes in November.

Kalshi secured $1 billion in funding at an $11 billion valuation this month. The platform won a legal battle against the CFTC over political betting markets earlier this year.

Other crypto companies are rushing into the sector. Trust Wallet launched prediction markets in December. Coinbase appears to be developing a betting platform backed by Kalshi. Trump’s Truth Social plans a prediction market with Crypto.com.

Distribution partner Robinhood has driven more than 50% of Kalshi’s market volumes at times.

Regulatory Environment Shifts

The CFTC’s approach to prediction markets has evolved under Acting Chair Caroline Pham. The agency previously took a restrictive stance, banning Polymarket and limiting Kalshi’s event contracts.

The Winklevoss twins raised concerns about Trump’s initial CFTC pick, Brian Quintenz, citing potential conflicts with his venture capital role and Kalshi board position.

State regulators have launched enforcement actions against some platforms, comparing event contracts to unlicensed sports betting.

Gemini will begin offering event contracts to US users on its web platform starting shortly. The exchange plans to roll out additional derivatives products in the future.

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