CFTC Approves Intermediated On-Chain Markets

Regulatory milestone: CFTC clears intermediated access for on-chain prediction markets

The U.S. Commodity Futures Trading Commission (CFTC) has issued a designation order enabling an on-chain prediction market platform to operate with intermediated access across the United States under federal supervision. The decision authorizes the platform to work with regulated intermediaries, opening a path for brokered access and wider institutional participation while requiring compliance with CFTC oversight standards.

This development represents a notable regulatory step for crypto-native trading venues seeking to bridge on-chain innovation with established regulatory frameworks. Market observers in 2025 say the move underscores a broader trend of tailored regulatory engagement as digital-asset activity matures and institutional demand rises.

What “intermediated access” means for market structure

Intermediated access allows a centralized or on-chain trading venue to connect to end users through licensed intermediaries such as brokers, futures commission merchants (FCMs) and other supervised entities. Rather than onboarding retail users directly, the platform coordinates with intermediaries that handle customer compliance, funding, and clearing under regulatory supervision.

• Access is provided via regulated intermediaries that are subject to CFTC oversight.
• Clearing and settlement frameworks must meet federally supervised exchange standards.
• Enhanced surveillance, reporting and compliance obligations are required of the trading venue and its intermediaries.

For an on-chain market, this arrangement blends smart-contract-based liquidity and order books with traditional market infrastructure for compliance and risk management. The regulatory designation mandates upgrades to surveillance tools, reporting systems and clearing arrangements to satisfy federal requirements.

Why the designation matters

The designation order signals that certain on-chain markets can satisfy the compliance, surveillance and clearing requirements that federal regulators expect from a trading venue. It provides a legal pathway for:

• Institutional market makers and liquidity providers to legally access on-chain markets.
• Broker-dealers and FCMs to offer customers exposure to event-driven products through regulated channels.
• Greater market transparency and standardized reporting across digital and traditional market layers.

Market implications in 2025

Coming in the context of 2025, the ruling aligns with several macro trends shaping crypto and derivatives markets:

• Greater institutional adoption: Asset managers and trading firms are increasingly seeking regulated routes into digital-asset products.
• Regulatory convergence: U.S. authorities are clarifying which crypto products are within scope of commodity and derivatives law, prompting firms to adapt compliance frameworks.
• Product innovation: Tokenized, event-driven products and on-chain derivatives are evolving to interoperate with traditional clearing and custody models.

Analysts note that when on-chain platforms meet supervisory standards, liquidity and market depth can expand quickly as professional traders and institutions allocate capital through regulated intermediaries.

Potential benefits for participants

Traders, intermediaries and institutional investors stand to gain from the integration of on-chain markets into regulated ecosystems. Key benefits include:

• Broader access: Intermediated models enable custodial and non-custodial players to participate without direct platform onboarding.
• Improved liquidity: Institutional market makers can deploy larger pools of capital once regulatory certainty is established.
• Enhanced market integrity: Surveillance and reporting requirements aim to reduce the risk of manipulation and increase investor protection.
• Cross-market hedging: Professional traders can more easily hedge exposures across traditional derivatives and on-chain instruments.

New use cases for event-driven instruments

Event-driven markets — covering political outcomes, macro events, policy shifts and sports — may find renewed legitimacy when operating under federal oversight. Institutional participants could use these instruments for:

• Macro-risk forecasting and portfolio hedging.
• Proprietary research and real-time signal aggregation.
• Liquidity provision around high-profile events, improving pricing efficiency.

Operational and compliance changes required

To qualify for intermediated access, the platform implemented comprehensive operational upgrades. Typical enhancements include:

• Advanced market surveillance tools to detect unusual trading patterns and potential manipulation.
• Robust clearing mechanisms aligning on-chain settlement with off-chain clearinghouses or clearing agents.
• Enhanced reporting systems that provide required trade and position information to regulators and intermediaries.
• Stronger governance, policies and procedures for anti-money laundering (AML), know-your-customer (KYC) and risk management.

These upgrades help ensure that on-chain order flow integrates with regulated intermediaries without undermining systemic resilience or investor safeguards.

Risks and open questions

While the designation is a major step forward, challenges remain for participants and regulators alike. Key risks include:

• Regulatory fragmentation: State-level rules and the roles of different federal agencies can create compliance complexity.
• Operational risk: Bridging on-chain settlement with off-chain clearing may introduce new technical and legal frictions.
• Market manipulation: Even with improved surveillance, decentralized execution layers can create novel manipulation vectors that require continuous monitoring.
• Custody and insolvency: Determining recourse and recovery in the event of breaches or insolvency of intermediaries or platforms remains a legal and operational challenge.

Market participants should expect ongoing dialogue between industry and regulators as these issues are tested and addressed in practice.

Industry momentum and growth indicators

Recent market data and funding activity in 2025 indicate robust interest in regulated on-chain products. Signals include rising user activity on hybrid venues, large-scale institutional capital allocations, and increased developer investment in compliance-first infrastructure.

Although specific figures vary across sources, common themes reported by industry observers include:

• Significant year-over-year growth in trading volumes for event-driven and on-chain derivative products.
• Notable funding rounds for platforms that prioritize regulatory compliance and enterprise-grade surveillance.
• Growing issuance of native tokens and incentive programs aimed at bootstrapping liquidity, alongside careful consideration of securities and commodities laws.

These trends suggest that regulatory clarity can reduce barriers to scale and attract a broader pool of professional market participants.

MEXC perspective and market readiness

At MEXC, we are closely monitoring regulatory developments and the operational practices emerging from intermediated on-chain market models. As markets evolve in 2025, exchanges and service providers must prioritize:

• Compliance infrastructure that harmonizes on-chain transparency with off-chain regulatory obligations.
• Interoperability with regulated intermediaries, custodians and clearinghouses.
• Investor protection measures, including robust surveillance, clear dispute resolution processes and transparent disclosures.

MEXC remains committed to fostering innovation while upholding regulatory standards that protect traders and strengthen market integrity. We continue to evaluate emerging products and partnerships that align with a compliance-first approach.

Outlook: what to expect through 2025 and beyond

The CFTC’s designation order is likely to catalyze further activity in regulated on-chain markets. Over the remainder of 2025, market participants should watch for:

• Additional approvals or regulatory carve-outs that clarify where different crypto products fit within commodities and securities frameworks.
• More platforms adopting intermediated access models to accommodate institutional demand while maintaining regulatory compliance.
• Innovation in hybrid clearing and settlement models that bridge smart contracts with supervised clearing infrastructure.
• Increased liquidity as institutional capital flows into regulated on-chain venues, improving pricing and market depth.

Successful scaling will depend on continued cooperation between platforms, intermediaries and regulators, as well as the development of resilient operational and legal frameworks.

Conclusion

The CFTC’s authorization for intermediated access by an on-chain prediction market marks a significant inflection point for regulated crypto trading in 2025. By requiring enhanced surveillance, clearing and reporting, the designation creates a model for how digital-native markets can operate within federal oversight while opening the door to institutional participation and deeper liquidity.

For traders, intermediaries and exchanges, the message is clear: regulatory engagement and robust operational controls are becoming prerequisites for growth. As the ecosystem adapts, MEXC will continue to monitor developments and support industry efforts to build compliant, transparent and resilient markets.

Disclaimer: This post is a compilation of publicly available information.
MEXC does not verify or guarantee the accuracy of third-party content.
Readers should conduct their own research before making any investment or participation decisions.