Spot crypto trading is a confidence business. Gemini just picked up a license to build something steadier.
The Commodity Futures Trading Commission gave Gemini Space Station the green light to run its own regulated derivatives clearinghouse Thursday. That means Gemini can clear and settle trades on its prediction market and derivatives platforms in-house, instead of leaning on outside infrastructure.
Shares rose 2.5% in premarket trading.
Approval to run a clearinghouse isn't an end goal for Gemini. It's a setup.
The clearinghouse opens the door for Gemini to launch perpetual futures, or "perps" - crypto contracts with no expiration date. Perps are the highest-volume product in crypto outside of spot trading, and native platforms like Kalshi and Polymarket are angling for the same business.
Cofounder Cameron Winklevoss told CNBC that owning the marketplace end-to-end gives Gemini more control over how its derivatives products scale. He also said prediction markets - contracts that pay out based on real-world events - "could be as big as traditional capital markets one day."
Gemini's stock is down roughly 90% since its September IPO, when shares popped 14% in their debut and traded as high as $45. Bitcoin is down about 30% over the same stretch, so Gemini's slide has been steeper than the asset class it depends on.
Spot crypto trading is the lifeblood of exchanges, but it swings with mood and volume cycles. Derivatives, event contracts, and prediction markets give exchanges a way to keep customers engaged when prices are flat or falling, which is the bigger pitch.
Winklevoss said Gemini also plans to bring stocks to the platform. The goal is to look more like a multi-asset broker and less like a crypto exchange.
The approval comes during an open fight between Washington and Albany. Earlier this month, New York Attorney General Letitia James sued Gemini and Coinbase, arguing their prediction market products fall under state gambling rules and should require licenses from the New York State Gaming Commission.
The CFTC then sued New York, arguing prediction markets fall under federal derivatives law.
Whichever side wins decides whether prediction markets get treated as a national derivatives product or a state-by-state gambling one.
Gemini isn't first into prediction markets, just deepest. Robinhood pushed in last year through a partnership with Kalshi, and Coinbase launched a similar Kalshi integration this January. Native platforms Kalshi and Polymarket remain core players in the category.
Gemini launched event contracts in December after a separate CFTC approval, and the new clearinghouse approval is what allows it to scale that business without paying outside infrastructure on every trade.
Before predictions became the focus, Gemini's growth bets ran through staking (locking up crypto to help secure a network in exchange for rewards) and a credit card. Adding stocks to the lineup gives the company three asset classes to lean on when crypto prices stall.
A class-action lawsuit in New York alleges Gemini misled investors about its strategy at IPO. Executive departures, international pullbacks, and a pivot toward AI and prediction markets have all unsettled some investors.
Gemini has a derivatives runway now. It still has to prove it can build a profitable business on it.
