U.S. CFTC blocks Michigan-ordered Kalshi trade cancellations

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CFTC blocks Kalshi trade cancellations

Highlights

The U.S. CFTC ordered Kalshi not to comply with a Michigan court directive to cancel trades, asserting exclusive federal regulatory authority over designated contract markets.
CFTC Chairman Mike Selig warned that canceling already executed trades would be unprecedented and could trigger a cascading loss of public confidence in regulated markets.
Michigan's effort marks the first attempt by a state to force the reversal of completed transactions, escalating the legal conflict over federal versus state jurisdiction in prediction markets.

Federal intervention over Michigan court order

As first reported by CoinDesk, the U.S. Commodity Futures Trading Commission on Tuesday orders Kalshi not to comply with a Michigan court demand to cancel certain trades already placed by customers in the state.

The agency says Michigan has no authority to interfere with contracts on a market it regulates as a designated contract market. In a statement issued with the order, CFTC Chairman Mike Selig says the commission will not allow states or state courts to pressure registered entities into violating the Commodity Exchange Act and CFTC rules.

Michigan's dispute with Kalshi stems from the state's campaign against online sports event contracts, which its attorney general argues amount to illegal gambling. In June, a county circuit court in Michigan orders Kalshi to cease online sports wagers in the state, and on July 2 the company submits an emergency request to the CFTC over how to respond to a court directive requiring certain Michigan users' trades to be voided, cancelled and refunded.

Broader implications for prediction markets

Selig says canceling already executed trades would be an unprecedented move that risks a cascading effect across the marketplace. The CFTC adds in its order that allowing such reversals could shatter public confidence by making traders fear transactions executed today may be unwound later.

The move expands an ongoing legal fight between the federal derivatives regulator and several states seeking to stop or penalize event contract businesses. The CFTC says Michigan is the first state to try to directly interfere with completed transaction activity, making the case a significant test of federal authority over prediction markets in the U.S.

Our earlier article on Circle’s federal regulatory approval covered how the stablecoin issuer received the green light to launch Circle National Trust as a federally regulated digital-asset custodian. We also highlighted Circle’s heavy reliance on interest income from USDC reserves and the mounting competitive pressure from new stablecoin initiatives that could squeeze its core revenue model.

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