The Commodities Futures Trading Commission (CFTC) has obtained an administrative stay of a recent court order in its case with prediction marketplace Kalshi.
This administrative stay has forced Kalshi to halt its just-launched US election trading pending when the court sufficiently considers the CFTC’s motion.
The predictions market is booming due to the crypto community’s enthusiasm over the likely winner of the upcoming election. Therefore, Kalshi could miss significant revenue by halting its election trading, which went live barely 24 hours ago.
Court Order Forces Kalshi to Halt Election Prediction Market
The US District Judge Jia Cobb sided with Kalshi in its case against the CFTC. The judge said the watchdog acted outside its jurisdiction by banning the prediction marketplace from listing election contracts.
This ruling allowed Kalshi to list derivative contracts for betting on the likely winner of the November elections. However, the CFTC kicked against this ruling, arguing that it needs to know the rationale behind the judge’s decision to determine whether to appeal the case.
The agency requested a 14-day stay of the order pending Judge Cobb’s full opinion. Notably, the stay order would have forced Kalshi to delay the launch of its election prediction markets.
However, the judge denied this request, prompting the CFTC to file an emergency motion at the US Court of Appeal. The regulator asked that the Court of Appeal stay the district court’s order.
The Court of Appeal granted an administrative stay of the district court judge’s order. The court noted that its ruling didn’t mean the CFTC’s motion merited it. However, the administrative stay will buy the court time to determine whether to stay the order until the appeal is concluded.
The administrative stay order forced Kalshi to halt its $100 million US election contracts market barely half a day after it went live.
Meanwhile, according to the Court of Appeal’s order, Kalshi can file a response to the agency’s emergency motion. This response will enable the court to determine whether to stay the order pending when the appeal is concluded.
Kalshi filed a letter opposing the CFTC’s emergency motion. The predictions market argued that a delayed election contracts listing would result in significant losses for its platform.
The platform also said it was ready to respond swiftly if the court grants an administrative stay to enable a ruling as soon as possible.
Impact of the Election Prediction Markets on Crypto
The case between the CFTC and Kalshi has gained traction due to the significance of prediction markets to crypto. Before the November US election, crypto enthusiasts rely on bettors’ sentiments to determine who will likely become the next president.
Crypto has taken center stage in United States politics as industry leaders throw in chunks of money to back pro-crypto candidates. Democratic presidential candidate Kamala Harris has remained silent about her stance on crypto.
On the other hand, Republican party flagbearer Donald Trump has been very vocal in declaring support for Bitcoin and the broader crypto industry.
This stiff contest has made this year’s election betting interesting and buzzy, with firms like Kalshi striving to partake in the spoils.
The performance of Bitcoin in the coming months will depend on who among both candidates emerges as the next president. Bernstein analysts have forecasted that the price of Bitcoin could reach $90,000 if Trump wins based on his pro-Bitcoin stance.
🧐 Les analystes de Bernstein prédisent un prix du #bitcoin de 80 000 à 90 000 $ d’ici la fin de l’année si Donald Trump remporte l’élection présidentielle américaine, ou de 30 000 à 40 000 $ si Kamala Harris est élue. pic.twitter.com/h7RQc7oRRV
— Journal du Coin (@LeJournalDuCoin) September 9, 2024
The analysts believe Bitcoin could decline to $30,000 if Harris emerges as the next US president. Polymarket data indicates that Trump has a 49% chance of winning the election while Harris has a 50% chance.
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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