Gemini Wins CFTC Clearance to Run a Derivatives Clearinghouse

Gemini said Thursday it has secured a pivotal authorization from the U.S. Commodity Futures Trading Commission (CFTC) that allows it to operate as a Derivatives Clearing Organization (DCO), clearing and settling activity tied to its derivatives business. With DCO status, Gemini can process settlement for prediction-market wagers and other derivatives trades in-house rather than routing transactions through an approved third-party clearing provider. The company said the added control should give it more flexibility in product design and could support a move into more sophisticated offerings, including perpetual futures—higher-risk derivatives that do not have an expiration date. "Gemini now has a full-stack, end-to-end market offering services such as predictions, futures, and options," co-founder Cameron Winklevoss wrote in a Thursday blog post on X, adding that the capability is "a key component of our super app" intended to centralize users' financial needs. Gemini joins a small cohort of firms with DCO approval. Prediction-market operator Kalshi has held a DCO since 2024, and competitor Polymarket has also received DCO authorization. Crypto.com also obtained DCO approval in the fall. Earlier this month, Kraken's parent agreed to acquire Bitnomial—already a DCO holder—for $550 million. Following Gemini's approval, only 22 companies in the U.S. hold DCO authorization, underscoring how scarce the license is and highlighting how prediction-market focused firms are increasingly establishing a foothold in CFTC-regulated derivatives. Gemini has recently leaned further into prediction markets. The company previously cut more than a quarter of its workforce and exited the European and Australian markets. The shift has also sparked litigation, including class-action claims. Earlier this month, New York State sought a $1.2 billion penalty alleging violations of state gambling laws, though the New York case was quickly dismissed. The CFTC has argued that prediction-market platforms should not be regulated under state gambling statutes and instead fall under federal oversight. Gemini (GEMI) shares were up more than 6% since Thursday's open, recently trading around $4.40. The stock is up 9% over the past month but remains down more than 55% year to date.