Kalshi to end liquidity incentive program as trading scrutiny grows

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Kalshi ends liquidity incentive program

Highlights

Kalshi will end its Volume Incentive Program no earlier than Oct. 13 following CFTC scrutiny and allegations of inflated perpetual futures volume.
Kalshi's monthly trading volume hit $52.98 billion in September, surpassing August's $38.67 billion and reaching an all-time high despite ongoing regulatory concerns.
Ark Invest disclosed direct exposure to Kalshi through ARKK, ARKW, and ARKF, while Kalshi is reportedly in advanced talks to raise about $1 billion at a $40 billion valuation.

Program closure and regulatory backdrop

As reported by The Block, citing The Wall Street Journal, the Commodity Futures Trading Commission is examining trades on Kalshi after allegations that repeated transactions inflated ether perpetual futures volume.

In a Monday filing with the CFTC, Kalshi says it intends to end its Volume Incentive Program no earlier than Oct. 13. The program launched in March 2023 and paid traders from reward pools based on their share of eligible volume, with the stated aim of boosting liquidity and improving pricing efficiency. The filing says the rewards were tied to trades on the central limit order book, generally at prices between $0.03 and $0.97 for event contracts.

The decision follows public claims from an X account called Beni, which alleged that Kalshi inflated perpetual futures volume. The post pointed to about $539 million in 24-hour trading volume against just $3.1 million in open interest for Kalshi's ETH perps pair. Kalshi says it is not under investigation over the matter and wrote in a blog post last week that wash trading does not occur on the platform, attributing the repeated prints to market makers posting fixed quotes that faster traders hit.

Volume growth and investor interest

Kalshi's monthly volume reaches $52.98 billion in September as of Sept. 29, surpassing the $38.67 billion recorded in August and setting an all-time high, although the September total remains incomplete. The latest activity suggests the platform is still drawing strong trading demand even as questions around market structure and surveillance persist.

Investor interest is also growing. Ark Invest announces that it now holds direct exposure to Kalshi through its ARKK, ARKW and ARKF exchange-traded funds, and says in an X post that it sees the medium-term prediction market opportunity at $1 trillion to $5 trillion in annual volume.

Nick Grous, Ark's director of research for consumer internet and fintech, says the firm wants investors in early even though Kalshi remains private. The capital markets backdrop is also strengthening, with Reuters reporting Tuesday that Kalshi is in advanced talks to raise about $1 billion at a roughly $40 billion valuation.

Our earlier report on AI risk in financial markets examined how the growing use of automated tools can heighten exposure to fraud, manipulation, and opaque decision-making that may undermine confidence. It also noted that regulators and industry participants are pushing for stronger governance, transparency, and accountability to ensure innovation does not erode market integrity.

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