Winklevoss’ Gemini set to bet big on prediction markets
Gemini, a cryptocurrency exchange founded by the Winklevoss twins, is planning to launch prediction market contracts to diversify its offerings and remain competitive in the crypto sector. These markets will allow controlled betting on events like elections and sports. Gemini has also applied for regulatory approval to establish its own derivatives exchange but faces potential delays. Competitors such as Kalshi and Coinbase are also exploring prediction markets, while platforms like Robinhood are collaborating with licensed providers. Despite regulatory hurdles and declining stock performance since its IPO, analysts view prediction markets as an opportunity for Gemini to expand its services.
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Gemini's Entry into Prediction Markets
Gemini, the cryptocurrency exchange founded by Tyler and Cameron Winklevoss, is preparing to launch prediction market contracts, according to anonymous sources. This move positions Gemini among the many financial firms entering the emerging field of prediction markets. These markets offer a controlled method for betting on the outcomes of events such as elections, sports games, and other occurrences. The launch highlights Gemini’s effort to diversify its offerings and strengthen its position amidst a highly competitive crypto exchange market.
Regulatory Approval Process for Derivatives Exchange
Recently, Gemini applied for regulatory approval to establish its own derivatives exchange, which would serve as a contract market. This move includes discussions about using the exchange for trading prediction contracts. However, approval from the US Commodity Futures Trading Commission (CFTC) can take months or even years, especially if delays arise due to events like government shutdowns. This lengthy process underscores the challenges cryptocurrency firms face in gaining regulatory permissions.
Industry Collaborations and Competitors
Another significant trend in the prediction market ecosystem is that some exchanges and retail investment brokers are collaborating with licensed platforms instead of building their own from scratch. For instance, platforms like Robinhood already offer event contracts from Kalshi Inc. Should Gemini proceed with its plans, it will face stiff competition from established players like Kalshi, which is registered with the US derivatives regulator, and Polymarket, which plans to resume US operations shortly.
New Prediction Market Initiatives
Other entrants to prediction markets include Trump Media and Technology Group, which partnered with Crypto.com as part of the growing trend. This partnership integrates prediction markets with Truth Social, Trump’s social media platform, using Crypto.com Derivatives North America as a clearinghouse. Initial testing of Truth Predict, the predicted market platform, is expected to commence soon.
Rising Competition and Industry Aspirations
Established companies like CME Group Inc. and Intercontinental Exchange Inc. have reportedly joined prediction markets, highlighting the competitive landscape. Furthermore, Coinbase Global Inc., a major competitor to Gemini, announced plans to branch into event contracts as part of its expansive goal to become an 'Everything Exchange'. In contrast, Gemini recently filed plans to launch event contracts connected to sports, finance, politics, and economics before its anticipated IPO in September.
Challenges and Opportunities in Prediction Markets
Although prediction markets present an opportunity for Gemini to diversify its portfolio, challenges remain. Since its IPO, Gemini’s stock has dropped by 40%, reflecting financial struggles; the company is not yet profitable and only accounts for a small share of US crypto trading. Experts highlight that prediction markets could help offset these struggles by expanding Gemini's services. However, regulatory challenges continue to loom large. For example, while the CFTC granted Kalshi approval to introduce new markets, state gaming regulators have opposed this decision in court, showcasing the hurdles firms must overcome in this space.