Gemini wins CFTC DCO approval to clear prediction markets

The Commodity Futures Trading Commission on Thursday approved Gemini to operate as a Derivatives Clearing Organization, authorizing the crypto exchange to clear its own prediction-market wagers and other derivatives trades.

The license allows Gemini to settle prediction-market bets and derivatives transactions in-house rather than relying on a third-party clearinghouse. The authorization gives the firm control over clearing, margining and settlement for products it lists and permits offerings such as perpetual futures, which do not have a set expiration date.

Co-founder Cameron Winklevoss wrote on X that “Gemini now has a full-stack, end-to-end marketplace for predictions as well as futures, options, and more.” He added the approval is “a major building block for our super app, where users will be able to fulfill their existing and future financial needs all in one place.”

The approval brings the number of U.S. entities with DCO status to 22. Other market participants with DCOs include Kalshi, Polymarket through an acquisition, Crypto.com and the parent company of Kraken, which recently agreed to buy Bitnomial for $550 million.

Gemini announced the license after it shifted focus toward prediction markets earlier this year. The company cut more than a quarter of its workforce and exited European and Australian markets. Shareholders filed a class-action suit in the Southern District of New York alleging the firm and its founders failed to disclose the pivot and overstated the strength of the core business ahead of a public listing. New York state sued Gemini for $1.2 billion, alleging violations of state gambling laws; the CFTC has filed a countersuit arguing that prediction platforms fall under federal commodity derivatives jurisdiction.

Market reaction was immediate: Gemini shares (ticker GEMI) rose more than 6% on Thursday to about $4.40, marking a roughly 9% gain over the past month while remaining more than 55% below their level at the start of the year.

A DCO license permits an entity to act as the central clearing counterparty for listed derivatives contracts. In practice, that requires processing trades, collecting margin, managing default funds and enforcing risk controls for cleared products. Operating as its own clearinghouse gives the exchange greater flexibility in product design and in setting internal risk rules, and reduces reliance on external clearing firms.

The CFTC’s authorization places Gemini within the commission’s derivatives framework. The commission has argued in its countersuit that prediction-market platforms are regulated as commodity derivatives at the federal level rather than under state gambling laws.