Kalshi asks SEC to pump the brakes on Cboe’s push into prediction markets

Kalshi, the prediction market platform that spent years fighting regulators for the right to list event contracts, now finds itself asking a regulator to slow things down for a competitor. The company submitted a formal comment letter to the SEC on August 5 opposing the immediate approval of Cboe Exchange’s proposal to offer binary options tied to company-specific key performance indicators.

The core argument: nobody has figured out whether these instruments are swaps, security-based swaps, or securities options. And until they do, Kalshi says, greenlighting the products would be premature.

A turf war dressed up as regulatory concern

Cboe filed its proposed rule change with the SEC around April 2026, with amendments following in subsequent weeks. The proposal would let the exchange list binary options based on KPIs linked to specific stock issuers, cleared through what would likely be a new or expanded clearing agency and supervised under the SEC’s umbrella.

Kalshi operates as a CFTC-designated contract market, meaning it self-certifies most of its event contracts through the Commodity Futures Trading Commission. Cboe, a traditional securities exchange, is going through the SEC instead. Two different regulators, two different approval processes, potentially overlapping products.

Just weeks before Kalshi fired off its comment, the CFTC and SEC issued a joint request for public comment on exactly the classification questions Kalshi is raising. The two agencies are actively trying to figure out where the jurisdictional lines fall for these novel derivatives. Kalshi’s position is straightforward: don’t approve the products while the people in charge are still publicly asking the public what these products even are.

The SEC’s comment deadline for public input on Cboe’s proposal is August 24, 2026. No final decision from the agency has been disclosed.

The prediction market land grab

Kalshi pioneered much of that transformation, battling the CFTC in court to win the right to list contracts on events like elections and economic indicators. Now Cboe, one of the largest and most established options exchanges in the world, is pursuing the same opportunity. Its approach routes through the SEC by framing these products as binary options rather than event contracts — same economic exposure for traders, different regulatory pathway.

Kalshi has been careful to frame its objection as pro-competition, saying it welcomes rival platforms entering the space. But it argues that waiting for regulators to establish clear definitions before letting anyone launch products in jurisdictional gray areas is necessary for a level playing field.

What’s actually at stake

The joint CFTC-SEC inquiry into how to classify these instruments could establish precedent for an entire generation of financial products. Binary options on company KPIs blur the traditional lines between derivatives and securities in ways that existing frameworks weren’t designed to handle.

The crypto-native prediction market Polymarket demonstrated during the 2024 US election cycle that demand for event-based trading is massive and growing. That success put traditional exchanges on notice. Cboe’s proposal is a direct response to the proof of concept that platforms like Polymarket and Kalshi have already provided.

The regulatory clock is ticking toward the August 24 comment deadline. After that, the SEC will need to decide whether to approve, deny, or extend its review of Cboe’s proposal. Discussions on necessary clearing and plan amendments are still ongoing, indicating a cautionary approach from regulators regarding the introduction of these new financial products.

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