Following the sturdy uptake of its US prediction markets, low cost brokerage Robinhood is exploring methods to carry the providing abroad, with early plans to launch related providers in the UK and Europe.
The corporate launched its Prediction Markets Hub earlier this yr, a platform that lets customers commerce on the outcomes of real-world occasions, similar to rate of interest choices or sports activities outcomes. Now, Robinhood is in discussions with the UK Monetary Conduct Authority (FCA) to find out how such merchandise could possibly be supplied domestically, Bloomberg reported Tuesday.
Nonetheless, one of many important challenges lies in regulatory classification.
In america, prediction markets are handled as futures merchandise, regulated by the Commodity Futures Buying and selling Fee (CFTC). In different jurisdictions, related merchandise could fall beneath playing legal guidelines, elevating questions on oversight.
“So the query could be the place is swap oversight, let’s say within the UK? That’s a query that we’ve been asking the FCA, how will we work it?” JB Mackenzie, vice chairman and common supervisor of futures at Robinhood Markets, instructed Bloomberg.
Mackenzie added that the UK and Europe are among the many areas displaying the strongest demand for prediction market merchandise.
The curiosity in increasing abroad is comprehensible. Robinhood CEO Vlad Tenev lately mentioned on X that the platform has already seen greater than 4 billion occasion contracts traded, with over half of that quantity occurring within the third quarter alone.
Whereas Robinhood’s product mimics the construction of decentralized prediction markets, it’s constructed fully on conventional monetary rails, not blockchain. Occasion contracts are executed by means of Kalshi, a CFTC-regulated derivatives change, and settled in US {dollars}.
Even so, Robinhood stays extremely energetic within the crypto and blockchain sectors, providing digital asset buying and selling and shifting towards tokenized inventory choices.
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Decentralized prediction markets acquire floor
Prediction markets have surged in prominence over the previous yr, fueled by the expansion of decentralized platforms. Constructed on public blockchains, these markets use good contracts to automate trades and payouts, permitting customers to take a position on outcomes starting from elections to financial information and sports activities.
Nonetheless, not like conventional exchanges, decentralized platforms provide larger transparency and accessibility, although in addition they face challenges similar to increased volatility, regulatory uncertainty and uneven liquidity.
The main decentralized platform, Polymarket, constructed on Polygon, has reported billions of {dollars} in month-to-month buying and selling quantity, with exercise peaking in November 2024 in the course of the lead-up to the US presidential election.
Polymarket’s accuracy and liquidity throughout that cycle drew widespread consideration, as merchants’ forecasts typically tracked intently with eventual outcomes.
Ethereum co-founder Vitalik Buterin described election cycles as just the start, noting that the deeper innovation lies in utilizing monetary incentives to align truth-seeking habits.
“The broader idea is that you should utilize finance as a strategy to align incentives as a way to present viewers with priceless data,” he mentioned.
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