CFTC Blocks New York's Attempt to Shut Down Kalshi Exchange

The Commodity Futures Trading Commission (CFTC) has ordered Kalshi to keep operating its exchange after New York's attempt to stop it was deemed a market emergency. The commission cited a hypothetical Bitcoin position to argue that forced liquidation could spread losses beyond prediction markets.

The CFTC claims that New York's enforcement action would create a 'major market disturbance' and an 'existential' threat to regulated markets, traders, and its own jurisdiction. Kalshi is headquartered in New York, and the commission argues that a ban on operating within or from the state could stop the exchange from serving anyone, anywhere.

The CFTC's order lists contracts on various events, including Federal Open Market Committee moves, Strait of Hormuz traffic, and cryptocurrency prices. The commission warns that shutdown risk would price a premium into every event contract, creating arbitrage driven by enforcement risk rather than the events being traded.