Crypto.com Expands into Prediction Markets with Internal Market Maker

Crypto.com Enhances Prediction Markets with Internal Market Maker

Crypto.com is taking a significant step into prediction markets by establishing an internal market-making team. This strategic move aims to boost liquidity while aligning with federal regulations, despite ongoing scrutiny surrounding market-making in outcome-based trading.

According to a Bloomberg report, Crypto.com is actively recruiting for a 'quant trader' role. This position will involve trading contracts linked to sports event outcomes on their prediction platform.

The announcement has spotlighted the practice of exchanges trading against customer orders, potentially raising conflict of interest concerns as prediction markets gain traction in both crypto and traditional finance sectors.

In a statement to Cointelegraph, a Crypto.com spokesperson emphasized their compliance with the US Commodity Futures Trading Commission, highlighting that their internal trading operations are fully disclosed and contribute to their North American derivatives business.

They stated, "More competition and liquidity on the platform creates a better overall experience," adding that both internal and external market makers adhere to the same rules to maintain market fairness.

Crypto.com ensures that no market maker gets preferential access to proprietary data or customer order flow, maintaining a level playing field. The company clarified that proprietary trading is not a revenue source, stating, "We offer our retail customers access to digital assets for a fee while staying risk neutral."

Wider Use of Market Makers in Prediction Markets

Market-making is not exclusive to Crypto.com. Competitors like Kalshi and Polymarket also employ professional trading companies or dedicated liquidity providers to enhance trading liquidity on their platforms.

Kalshi, a federally regulated event-contract exchange, relies on designated market makers instead of a purely peer-to-peer order book. It has been reported that Susquehanna International Group has been providing market-making services to Kalshi since 2024.

Similarly, Polymarket, known for its accurate predictions during the US presidential election, is also developing an internal market-making unit.