CFTC backed Crypto.com in the fight over who regulates prediction markets

The Commodity Futures Trading Commission moved on February 17, 2026, to support Crypto.com Derivatives North America in a federal appeal that could determine whether states may apply gambling laws to sports-linked event contracts traded on a federally regulated derivatives exchange.

In an amicus brief submitted with a motion for permission to file, the CFTC asked the U.S. Court of Appeals for the Ninth Circuit to reverse and remand a Nevada district-court decision. The agency argued that event contracts traded on a CFTC-registered designated contract market are swaps governed by the Commodity Exchange Act and that the federal statute displaces state attempts to regulate or prohibit those transactions.

That was the Commission’s legal position, not a judicial ruling. The Ninth Circuit docket showed the brief and accompanying motion on February 17; the court had not yet granted permission to file it as of that date.

A dispute over derivatives and gambling

The appellant was North American Derivatives Exchange, doing business as Crypto.com Derivatives North America. Nevada’s gaming authorities had issued the company a cease-and-desist letter on May 20, 2025, targeting sports-related event contracts offered without a state gaming license.

Crypto.com sued, contending that its status as a designated contract market placed the contracts within the CFTC’s exclusive federal jurisdiction. On October 14, 2025, the U.S. District Court for the District of Nevada denied both the company’s motion for a preliminary injunction and its request for judgment on the pleadings. Crypto.com appealed under case number 25-7187.

The CFTC’s February 17 brief attacked the district court’s legal premise. It classified event contracts as swaps because their payouts depend on the occurrence, nonoccurrence or outcome of an event. It further argued that Congress designed federal derivatives regulation to provide nationally uniform rules for exchange trading, clearing, surveillance and enforcement.

Nevada’s position represented the opposing institutional concern: contracts determined by sporting outcomes can resemble conventional sports wagers, an area historically regulated by states. The unresolved question was whether the federal treatment of a product as an exchange-traded derivative prevented Nevada from applying its gaming laws to the same economic activity.

Why the filing mattered to crypto markets

The case was narrower than a general ruling about cryptocurrency. It did not decide whether a token was a security, establish rules for spot crypto trading or approve every prediction-market product. Its immediate subject was event contracts offered through Crypto.com’s federally regulated derivatives business.

Even so, the institutional consequences extended across the digital-asset industry. Crypto exchanges were expanding beyond spot-token trading into derivatives, payments, custody and event markets. If each state could prohibit contracts listed on a designated contract market, nationally operating platforms could face different product menus and compliance duties across state lines. If federal law preempted state gaming rules, states could lose substantial control over products they regarded as unlicensed wagering.

The CFTC also made clear that its preemption theory was not unlimited. Its brief said states retained authority over general civil and criminal antifraud laws, purely intrastate conduct and transactions outside the federally regulated field. The agency’s argument concerned swaps conducted on a CFTC-registered contract market.

What remained unresolved on February 17

The filing did not resolve the appeal, authorize additional contracts or invalidate Nevada law. Crypto.com still needed the Ninth Circuit to accept the brief and ultimately agree with its interpretation of the Commodity Exchange Act.

In later procedural context, the Ninth Circuit granted the CFTC permission to file the amicus brief on February 26, 2026. That later order confirms acceptance of the filing but should not be projected backward: on February 17, the central development was the federal regulator formally taking a side in a pending jurisdictional dispute, not a victory for either party.