BitGo, a digital asset custody and trading platform, is partnering with Susquehanna Crypto to offer institutional investors over-the-counter access to prediction markets. The collaboration, announced Tuesday, allows clients to trade event-based contracts using cryptocurrency or stablecoins held directly in custody. Trades are routed through BitGo’s platform, with liquidity supplied by Susquehanna. The arrangement targets hedge funds, family offices, and other large investors.
Under the structure, participants can execute bilateral trades without moving assets off the platform or converting holdings such as Bitcoin or stablecoins into cash. Positions are backed by crypto collateral and documented through derivatives-style agreements. Minimum trade sizes begin at $100,000. BitGo says the setup addresses longstanding gaps in custody, collateral management, and execution infrastructure that have kept institutional players out of prediction markets.
Prediction markets enable users to trade contracts tied to the outcomes of real-world events, with prices reflecting the implied probability of a given result. Contracts can span a wide range of subjects, from sports and geopolitical events to short-term Bitcoin price movements and weather conditions. Despite growing use as tools for pricing event-driven risk, institutional participation in these markets has historically been limited.
The partnership launches at a time when prediction markets are facing mounting legal pressure across the United States. At least 11 states have taken action against platforms such as Kalshi, arguing they function as unlicensed gambling venues. In Nevada, a state court issued a temporary ban on Kalshi on March 20, siding with gaming regulators who contend the platform offers unlicensed betting on event outcomes. That ruling followed a federal appeals court decision denying Kalshi’s emergency request to pause the case.
In Arizona, authorities filed criminal charges against entities linked to Kalshi, alleging the platform accepted wagers on elections and sports in violation of state law. Kalshi co-founder and CEO Tarek Mansour described the charges as a “total overstep,” arguing the platform’s activity is unrelated to gambling and accusing the state of attempting to bypass the judicial process. Meanwhile, lawmakers in Utah are pursuing legislation that would classify certain event-based contracts as gambling, and Pennsylvania lawmakers are preparing a bill that would place the sector under the state’s gaming regulator, including a 34% tax on revenue.
Not all regulatory efforts have succeeded. In Tennessee, a federal judge blocked a state attempt in February to halt Kalshi’s operations, ruling that its event contracts fall under the Commodity Exchange Act and are subject to oversight by the Commodity Futures Trading Commission rather than individual states. The ruling offered a degree of legal clarity for platforms operating in the space, though the broader regulatory environment remains unsettled.
Prediction markets have also drawn scrutiny over potential insider trading, after several well-timed bets appeared to anticipate significant events. In response, Kalshi and Polymarket introduced new restrictions on Monday aimed at limiting the use of non-public information and preventing individuals with direct influence over outcomes from participating in related trades. At the federal level, the CFTC published an advance notice of proposed rulemaking on March 12, seeking public input on how prediction market contracts should be regulated going forward.
Originally reported by CoinTelegraph.
