Institutional Access Expands for Kalshi Event Contracts

Digital assets prime brokerage FalconX and investment bank Cantor Fitzgerald have taken steps to expand institutional access to event contracts on Kalshi, a CFTC-regulated prediction market. The two firms are collaborating with Kemet, an execution and risk platform for institutional digital asset derivatives, to enhance institutional exposure to contracts on Kalshi.

Ash Ashmawy, chief executive of Kemet, said that the firm has been building infrastructure for the 24/7 lifecycle of digital asset derivatives for nearly four years. Prediction markets have become more prevalent in conversations and are attracting more liquidity, especially in the run up to the U.S mid-term elections in November.

FalconX's head of markets, Joshua Lim, said that institutions are primarily interested in prediction contracts on economic data and political markets. They use event contracts to hedge against adverse outcomes to their broad crypto thesis, such as whether the Clarity Act is passed in the U.S.

Liquidation sizes tend to be between $1m and $10m, much smaller than in vanilla derivatives. Lim expects it will take about five years before event contracts are in the toolkit of most hedge funds, especially as regulation is still uncertain.