Another player might soon enter the fast-growing scene of US prediction markets: Kraken.
The Wyoming-based crypto exchange announced on Thursday (October 16) that it is buying Small Exchange for $100 million. Small Exchange is already registered with the Commodity Futures Trading Commission (CFTC) as a designated contract market (DCM), which means it is allowed to run a federally regulated exchange in the US. That license could pave the way for Kraken to compete with platforms like Polymarket and Kalshi as interest in prediction markets heats up. It was previously owned by IG Group.
Not much has been said about whether it intends to offer sports betting opportunities. However, existing platforms are already facing scrutiny in several states.
Kraken deal paves the way for it to become a prediction market
Kraken said the deal “advances our mission to build a unified, high-performance trading environment,” adding that a DCM license “authorizes us, under the oversight of the Commodity Futures Trading Commission (CFTC), to design and create markets for exchange-listed derivatives in the US.”
Major step in Kraken’s market structure journey. Acquiring a CFTC-regulated venue adds yet another piece to our global architecture. More financial market access on the way for the US.https://t.co/kVqBGsPc2P
— Dave Ripley (@DavidLRipley) October 16, 2025
Arjun Sethi, Kraken’s co-CEO, described the move as a major step in building out the company’s global trading infrastructure.
“Kraken’s acquisition of a CFTC regulated Designated Contract Market creates the foundation for a new generation of United States derivatives markets,” he said. “It is designed for scale, transparency and efficiency.”
Sethi explained that the goal is to connect all of Kraken’s trading products, including spot, futures and margin, under one regulated system. “This step connects spot, futures and margin products inside a single regulated liquidity system, reducing fragmentation, lowering funding latency and bringing onshore the kind of access and performance that has mostly existed offshore,” he said.
He added that under CFTC oversight, Kraken can now “integrate clearing, risk and matching into one environment that meets the same standards as the largest exchanges in the world.”
Kraken already operates regulated derivatives venues in the UK and the European Union. With the addition of Small Exchange, it now covers three major regions and offers trading across six fiat currencies and more than 450 digital and traditional assets.
“Together, these elements create a network that moves collateral in real time, nets exposure across jurisdictions, and reduces capital inefficiencies that have long held back US traders,” Sethi said. “This is not about marketing or narrative. It is about building better market structure.”
The acquisition follows other strategic moves by Kraken in the US futures space. Earlier this year, the company bought NinjaTrader, a popular futures platform that lets clients trade CME-listed crypto futures alongside spot crypto. In October, it expanded that platform to include equities, FX indices and commodities such as oil and gold.
In 2019, Kraken also acquired Crypto Facilities, a UK trading platform regulated by the Financial Conduct Authority. The venue now powers what Kraken calls Europe’s largest regulated crypto futures market under MiFID II rules.
“By securing the necessary licensing and infrastructure today,” the company said, “we are laying the groundwork for institutional-grade markets as crypto matures.”
Featured image: Kraken
