- BitGo and Susquehanna Crypto have partnered to create the first institutional OTC offering for event-based prediction market contracts.
- Trades start at $100,000 and are collateralized with cryptocurrency, allowing investors to participate without converting holdings to cash.
- The institutional launch coincides with significant regulatory pressure on prediction markets in at least 11 U.S. states.
On Tuesday, custody platform BitGo and Susquehanna Crypto announced a first-of-its-kind collaboration to provide institutional clients with over-the-counter access to prediction markets. Consequently, large investors like hedge funds can now trade contracts on real-world events using cryptocurrency held directly with BitGo.
According to the announcement, Susquehanna will provide liquidity and trades start at a $100,000 minimum. These positions use crypto collateral within a derivatives-style agreement, which aims to fill gaps in custody and execution infrastructure.
Prediction markets let users bet on outcomes for sports, politics, or Bitcoin Price movements. However, institutional activity has previously been limited due to operational hurdles.
Meanwhile, the sector faces mounting legal challenges within the United States. State regulators in Nevada secured a temporary ban on platform Kalshi on March 20, while Arizona authorities filed criminal charges against linked entities.
Kalshi CEO Tarek Mansour called the Arizona charges a “total overstep,” arguing the platform’s activity is not gambling. Conversely, some states are moving to formally regulate these markets under existing gaming laws.
Federal authorities are also evaluating the space. On March 12, the Commodity Futures Trading Commission (CFTC) published an advance notice of proposed rulemaking on the topic. This follows a Tennessee federal judge ruling that such contracts fall under the CFTC‘s purview.
Platforms have also introduced new restrictions to address insider trading concerns. These rules aim to prevent trades based on non-public information or by participants who can influence event outcomes.
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