CFTC Enforces Trading Continuity for Kalshi
The Commodity Futures Trading Commission (CFTC) invoked its emergency authority to ensure that Kalshi continues its trading operations following a market emergency declaration by the exchange itself. This intervention comes in response to a lawsuit initiated by New York Attorney General Letitia James on July 31, which aims to halt Kalshi's nationwide offering of event contracts and seeks over $36 billion in damages.
The CFTC's order requires KalshiEX to operate under the principles established by the Commodity Exchange Act, a federal framework designed for designated contract markets. CFTC Chairman Michael Selig criticized the New York lawsuit as an attempt to obstruct market operations before legal resolutions occur, arguing that the state is mischaracterizing these interstate financial markets as gambling, a domain it should not regulate. He stated, "New York has no business regulating these interstate financial markets," emphasizing that Congress intended for derivatives exchanges to operate outside the confines of varying state laws.
Legal Scrutiny of State Regulations
The CFTC has escalated its legal stance against several states, filing lawsuits against nine and submitting amicus briefs in various courts, including the Sixth and Ninth Circuits, and the Supreme Judicial Court of Massachusetts. This aggressive legal approach has expanded to encompass states such as Wisconsin and Minnesota, which faced lawsuits soon after imposing bans on prediction markets.
