Crypto.com Hires Internal Market Maker for Predictions – Is the Exchange Trading Against Users?
Crypto.com is transferring deeper into prediction markets with plans to employees an inside market-making desk, a step that’s drawing renewed consideration to how these platforms function and whether or not exchanges could find yourself buying and selling immediately in opposition to their very own customers.
The Singapore-based cryptocurrency trade is recruiting a quantitative dealer to hitch a workforce accountable for shopping for and promoting monetary contracts tied to the outcomes of sporting occasions on its prediction market platform.
Liquidity or Conflict? Crypto.com’s Market-Making Role Sparks Debate
According to a current Bloomberg report, the function would sit on Crypto.com’s market-making desk and contain actively buying and selling in opposition to buyer orders to help liquidity throughout sports activities contracts and different derivatives supplied on the firm’s U.S. platform.
The hiring effort comes as prediction markets expand rapidly throughout each crypto and conventional finance.
These platforms enable customers to trade contracts that settle based on real-world outcomes, akin to sports activities outcomes or political occasions, with costs reflecting the market’s implied likelihood.
While prediction markets have lengthy offered themselves as impartial venues the place individuals commerce in opposition to one another, the use of in-house market makers has raised questions on conflicts of curiosity.
Market making has turn into a delicate concern for event-contract exchanges, notably these working underneath U.S. federal oversight.
Critics argue that when an trade or its affiliate takes the reverse aspect of buyer trades, the construction begins to resemble a conventional sportsbook that earnings from buyer losses.
Those considerations have already surfaced elsewhere in the business. Kalshi, certainly one of the most outstanding regulated prediction market operators, runs an inside unit referred to as Kalshi Trading.
Polymarket, a significant decentralized platform, can also be reported to be constructing its personal inside market-making workforce.
Crypto.com’s job itemizing states that the new rent would search to “maximize earnings whereas rigorously managing dangers,” language that has fueled debate over whether or not the agency is successfully buying and selling in opposition to its customers.
In response, in a report, a Crypto.com spokesperson stated the firm doesn’t depend on proprietary buying and selling as a income supply and described its enterprise mannequin as offering buyer entry to digital belongings and occasion contracts for a payment whereas remaining danger impartial.
The spokesperson added that the inside market maker doesn’t obtain preferential entry to buyer order circulation or proprietary information and operates underneath guidelines disclosed to the Commodity Futures Trading Commission, which oversees derivatives markets in the U.S.
Prediction Markets Hit Record Volumes, however Trading Rules Stir Concerns
The trade has additionally taken steps to draw exterior liquidity suppliers. Like its opponents, Crypto.com has sought to herald skilled buying and selling corporations to make sure steady shopping for and promoting, notably in high-volume sports activities markets.
However, firm guidelines grant designated market makers on sports activities contracts a three-second head begin over smaller merchants, a coverage that has drawn scrutiny for probably permitting giant individuals to regulate costs forward of retail customers.
The broader business continues to develop regardless of these considerations, with prediction markets linked to sports activities and politics having pushed a lot of the current surge in exercise.
Platforms together with Kalshi, Polymarket, and Limitless recorded a mixed $44 billion in buying and selling quantity this yr, with Kalshi reaching roughly $1 billion in weekly quantity at its peak.
On-chain prediction markets have expanded even sooner, with month-to-month quantity climbing from underneath $100 million in early 2024 to greater than $13 billion, according to joint analysis from Keyrock and Dune Analytics.
Major crypto corporations are additionally getting into the area. Coinbase not too long ago rolled out prediction market buying and selling on its platform and agreed to acquire The Clearing Company as a part of its push to scale regulated event-based markets. The transfer adopted Kalshi’s $300 million Series D raise at a $5 billion valuation, exhibiting investor curiosity in the sector.
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