Phantom Kalshi rollout brings prediction markets to a crypto wallet

The Phantom Kalshi rollout started on Friday, Oct. 23. Crypto wallet provider Phantom began offering Kalshi's prediction markets to U.S. customers, and more of them will get access over the coming weeks, the company said. Users must pass Kalshi's identity checks before they can trade event contracts inside the app.

What happened

Phantom is not registered with the Commodity Futures Trading Commission. Under Staff Letter 26-09, issued in March, CFTC staff agreed that the wallet would not need to register as an introducing broker, subject to 10 conditions, Unchained reported. In September, the agency extended the same relief to similar software providers.

Kalshi "approves and holds users' trading accounts, and executes the trades they submit using Phantom," general counsel Kevin Jacobs wrote in the company's post. He said this product was the reason Phantom asked for the relief. Users can pay from a Phantom Cash balance in CASH, Phantom's dollar stablecoin, or with any Solana token, and winnings return to the Cash account. Phantom quoted a fee of $0.02 per contract plus a small network fee, according to The Block; Unchained said that is $0.01 for Phantom on top of Kalshi's own $0.01.

Kalshi is opening its full catalog, and Phantom picks the markets it displays, The Block quoted Max Crowley, Kalshi's vice president of business development, as saying. "Phantom did the regulatory work up front, and it's a model for how prediction markets can reach more people," he said in Phantom's post. Crowley expects the deal to bring Kalshi more users and liquidity.

Why it matters

The launch lands in the middle of a legal fight. Several states argue that Kalshi's contracts are illegal gambling. At first Phantom will hide sports contracts in Michigan, The Block reported. In Nevada it will also hide elections, politics and entertainment alongside sports. Washington gets the widest block, adding culture, science and tech, mentions and geopolitics to the Nevada list. Michigan won a preliminary injunction on Sept. 2 that carries a $500,000-a-day fine, Unchained said.

"Our perspective is that the CFTC's jurisdiction here is clear," Jacobs told The Block. He said Phantom will follow state limits while cases run and expects the Supreme Court to settle the question. Our coverage of the Utah Kalshi lawsuit shows how fast that map is changing.

For Kalshi, the Phantom Kalshi rollout is a new distribution channel into crypto users. It has recorded more than $291 billion in volume this year, and October reached $55.33 billion with nine days left, against September's record $59.32 billion, according to The Block.

What's next

Phantom warned users that a lack of buyers can leave them unable to sell "even when your position shows a profit," Unchained noted. Jacobs said "more ways to pay are coming soon."

The Phantom Kalshi rollout will be judged on how many users finish identity checks and how active they are. Also watch whether other wallets use the September relief to follow. Volume records have kept falling, as in our story on the $11 billion prediction market weekend. Rules and limits are set out in the Phantom announcement.