CFTC Emergency Order Requires Kalshi to Keep Operating, Citing Bitcoin Liquidation Risk

The U.S. Commodity Futures Trading Commission issued an emergency order on Aug. 11 requiring Kalshi, a prediction market platform, to keep its exchange running. The directive, the agency said, follows normal business practices and core principles under the Commodity Exchange Act. Before issuing the order, the CFTC had decided that New York state's attempt to prevent the platform from operating was a market emergency. The CFTC warned that forcing liquidation of a bitcoin price position open through the end of 2026 could push traders to simultaneously close out bitcoin and other asset positions. It could also leave arbitrageurs holding the opposite side of such trades exposed to one-sided risk. The same order cited contracts tied to the federal funds rate, traffic through the Strait of Hormuz and the timing of a recession. Judge Vernon D. Oliver of the U.S. District Court for the District of Connecticut signed a ruling on Aug. 7, and it was entered on Aug. 10. In that ruling, he concluded that Kalshi's sports contracts are not swaps. Even if they were swaps, he added, federal law would not preempt Connecticut's gambling regulations. This article is based on a report from Bitcoin.com News.