Gemini Space Station has received approval from the U.S. Commodity Futures Trading Commission to operate a regulated derivatives clearinghouse, giving the crypto exchange more control over its prediction market and derivatives business.
The approval allows Gemini to clear and settle trades internally instead of relying on outside clearing infrastructure. Shares of Gemini rose about 8% after the announcement to trade at $4.48 as investors reacted to the company’s deeper push into prediction markets and future crypto derivatives.
The license allows Gemini to operate as a Derivatives Clearing Organization, or DCO. Such approval is limited in the United States, with only a small number of companies authorized to perform the function.
Gemini Gains Control Over Clearing and Settlement
The DCO license gives Gemini the ability to manage clearing and settlement for its own derivatives-related products. That includes prediction market contracts and could eventually support more complex instruments such as perpetual futures.
Cameron Winklevoss, Gemini cofounder and president, said owning and operating the marketplace end to end gives the company more flexibility as it builds prediction markets and future crypto derivatives products.
Gemini launched event contracts in December after receiving regulatory approval. The company now plans to expand beyond prediction markets into a wider set of derivatives products.
The approval may also support Gemini’s longer-term plan to become a broader financial platform. The company has discussed adding equities trading and agentic trading tools as it seeks to diversify beyond spot crypto trading.
Prediction Markets Become Key Growth Area
Crypto exchanges are increasingly moving into prediction markets, futures, options, and event contracts to reduce reliance on spot trading revenue. Spot crypto activity often moves with market sentiment and digital asset prices, making revenue more cyclical.
Prediction markets allow users to trade contracts tied to outcomes such as elections, economic data, sports, corporate events, and other measurable events. Gemini argues the category could become a durable market rather than a short-term trading product.
Other companies have also moved into the space. Kalshi already operates with clearinghouse approval, Polymarket acquired a firm with similar authorization, Crypto.com received DCO approval, and Kraken’s parent company recently moved to acquire Bitnomial.
Gemini’s license gives it an internal structure for clearing, settlement, and product expansion. That may help the exchange move faster when launching new contracts or adjusting market design.
Legal Scrutiny Surrounds Event Contracts
The approval comes during a wider regulatory fight over prediction markets. New York Attorney General Letitia James recently sued Gemini and Coinbase, arguing that their prediction market products should fall under state gambling rules.
The CFTC has pushed back against that position, arguing that federally regulated event contracts fall under derivatives law rather than state gambling oversight.
Concurrently, the debate has also reached Congress. According to U.S. Senator Bernie Moreno, the US Senate has unanimously passed a rule barring senators from trading on prediction markets, effective immediately. The move followed concerns over insider trading and contracts tied to sensitive political or government events.
Kalshi recently said it suspended and fined political candidates accused of trading on their own campaigns. A separate criminal case also raised concerns over the use of confidential government information to trade event contracts.
Despite the CFTC approval, Gemini remains under investor pressure after its September IPO. The stock traded sharply lower after its debut, alongside weakness in crypto prices and concerns over losses, executive departures, and strategic changes.
