CFTC Signals Support as Kalshi Tokenizes Prediction Markets

On December 8, the CFTC’s acting chairman, Caroline D. Pham, announced the launch of a pilot program that will allow certain digital assets, such as Bitcoin, Ethereum, and USDC, to be used as collateral in derivatives markets.

Such a regulatory shift sets the stage for platforms like Kalshi, which at the start of December went on-chain with its tokenized prediction markets.

The company’s head of crypto, John Wang, announced that Kalshi partnered with Jupiter and DFlow to bring its tokenized prediction markets to Solana. This will allow traders to settle via on-chain request for quotes (RFQs) while still routing through Kalshi’s existing orderbook.

Kalshi says prediction markets have entered the “Powered by Kalshi” era, and this move could redefine how the industry operates while integrating regulated markets with broader crypto ecosystems.

Kalshi’s tokenization driving decentralized finance

Kalshi’s decision to tokenize its prediction markets marks a structural shift in how US-regulated markets interact with the broader crypto ecosystem. However, the platform’s latest crypto move could put it even more in direct competition with Polymarket, a decentralized prediction market platform that has earned strong trust among crypto-native users.

Comparing the two platforms, the editor-in-chief of SolanaFloor, Awais Afzal, said that Polymarket’s lack of know-your-customer (KYC) requirements was a driving factor in its growing adoption. Kalshi’s regulation-heavy operation, on the other hand, limits its reach.

“Tokenizing its markets creates a pathway to broader crypto native participation, helping Kalshi compete on distribution and accessibility while retaining its regulated market foundation.”

Moreover, the addition of on-chain RFQ execution introduces capabilities that were simply not possible within the platform’s previously heavily centralized system. As HashKey researcher Tim Sun explained, a winning position on Kalshi can now be tokenized and used as collateral, borrowed against, lent out, integrated into automated strategies, or dropped into any on-chain portfolio. Essentially, this brings prediction markets into the heart of decentralized finance (DeFi), whose total value locked (TVL) exceeds $119 billion.

SolanaFloor’s Afzal explained that Solana has become a hub for on-chain trading across asset classes, capturing 95% of global tokenized stock trading volume. For Kalshi, this expansion goes beyond tapping new users. By wrapping event contracts as Solana Program Library (SPL) tokens, digital assets built on the Solana blockchain, Kalshi positions itself as a base liquidity layer that other applications can build on top of.

“Moving execution on-chain allows Kalshi markets to tap directly into Solana’s liquidity, routing, and composability. It also enables broader global participation, making prediction markets accessible beyond the geographic and access limitations of a centralized exchange model.”

CFTC pilot program brings tokenized collateral into the mainstream

The CFTC’s recently introduced digital assets pilot program represents a meaningful shift for regulated markets.

I’m launching a digital assets pilot program for BTC, ETH and USDC that will protect Americans under U.S. rules when you use @CFTC brokers to keep your crypto safe. Our new guidance will enable tokenized markets, and we’re cutting red tape that is outdated. Onwards!…

— Caroline D. Pham (@CarolineDPham) December 8, 2025

Under the pilot program, registered derivatives firms can now accept Bitcoin, Ether and USDC as margin collateral, with strict reporting and risk-management requirements.

Speaking with Prediction News, Jim Clark, the founder of Civilization Labs and the Bridge Era Institute, explained that Kalshi’s tokenized prediction markets and the CFTC’s pilot program are a model that highlights a “safe, regulated core with faster, more flexible tokenized trading around it.”

While the CFTC has not declared tokenized prediction markets eligible collateral, the agency’s broader stance signals that regulated markets using tokenized assets are no longer hypothetical.

“If some event-market tokens one day count as collateral, prediction markets stop being side bets and start becoming real tools for managing risk,” Clark added. “That’s powerful, but it also means bad odds or manipulation could affect a much bigger chunk of the financial system.”

For Kalshi, the regulatory overlap is clear. Tokenized markets now sit on a trajectory toward deeper integration with traditional finance, provided they meet the CFTC’s guidelines around custody, valuation and operational risk.

The rise of prediction market applications

In addition to tokenizing its prediction markets, Kalshi also introduced its own “Builder Codes,” a mechanism that allows applications to integrate their markets and monetize user volume.

Hyperliquid has fundamentally changed how crypto products are developed and distributed, and Kalshi’s latest announcement is yet another confirmation.@Kalshi just introduced its own “Builder Codes”, a mechanism that lets any application integrate its markets and monetize user… pic.twitter.com/zT1hc4LfgK

— OAK Research (@OAK_Res_EN) December 3, 2025

Kalshi’s Builder Codes could spark genuine tooling innovation, similar to what Uniswap v3 did for decentralized exchanges, HashKey’s Sun explained.

“Builder Codes transform prediction markets from siloed products into composable infrastructure. Developers can now permissionlessly monetize applications built on Kalshi’s liquidity, earning fee shares proportional to volume without approval, similar to Uniswap’s LP model.”

Kalshi’s $2 million incentive will provide the initial capital needed to kickstart this program; however, the real “unlock,” Sun added, will be the ongoing revenue tied to trading volume.

From an ecosystem perspective, the program is equally as meaningful. SolanaFloor’s Afzal highlighted that fee-sharing models have historically enabled major innovation, pointing to platforms like Jupiter and wallets such as Phantom, which have generated millions by embedding trading and routing directly into the user experience.

“Applying a similar model to prediction markets could enable broad integration across leading apps, improving access for users while unlocking new revenue opportunities for builders. It is a win-win outcome for the Solana ecosystem.”

A hybrid future for global prediction markets

Kalshi is positive that “tokenization is the endgame,” but HashKey’s Sun said it will likely come as a hybrid, rather than a purely decentralized model. This could include cross-chain prediction tokens bridged across various blockchains like Solana, Polygon, and a number of Ethereum Layer-2 (L2) applications, while multiple liquidity sources (Polymarket, Kalshi) feed shared token standards.

“In this case, prediction positions become as liquid as stablecoins: instantly swappable, usable as collateral across DeFi, and tradeable by AI agents reacting to real-time data.”

While US traders will always require CFTC’s compliance approval, tokenization ultimately removes geographic boundaries.

“Regulated market operators provide compliant base layers, while tokenized wrappers allow global access and distribution. This hybrid structure allows regulated markets to scale internationally without fragmenting liquidity along jurisdictional lines, creating a single, globally accessible prediction market layer built on open infrastructure,” SolanaFloor’s Afzal said.

Civilization Labs’ Clark agreed that all signs could point toward a hybrid future; however, clashes with state laws, how compliance is handled on wallet-to-wallet trades, and ensuring such markets “inform reality instead of pushing it around” could come out as the “big loose ends.”

In the end, Kalshi’s tokenization push could be less about chasing a crypto trend and more about securing a place in an emerging, and now regulated layer of on-chain finance. If the hybrid model does evolve, the platforms that combine compliance with composability could help define the next era of prediction markets.