Alpaca, a provider of a developer-first API for stock, options, and crypto trading, is preparing to capitalize on emerging opportunities by entering the hot prediction markets sector. To that end, the company has submitted the necessary applications in a move that would broaden its business.
Alpaca Secures the Necessary Approvals
According to the announcement, Alpaca confirmed becoming a National Futures Association (NFA) member. In addition to that, the business confirmed registering as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC). These two steps confirm Alpaca’s intention to make a foray into the event contracts space and make the most of its rapid growth.
According to company officials, its registration as an NFA Member and an FCM broadens its “regulated brokerage capabilities” by allowing it to offer access to event contracts traded on prediction markets. The company teased that it plans to double down on this expansion and introduce a broader range of futures products in the near future.
As of the time of this writing, however, Alpaca has yet to officially start its FCM operations and has not provided an official date as to when this launch would happen. Still, the regulatory approvals seem to suggest that this launch is only a matter of time.
In any case, Alpaca’s registration as an FCM would allow it to independently distribute futures products rather than relying on another FCM, as certain other companies in the prediction markets space do.
Alpaca’s B2B clients will therefore be able to integrate prediction markets products into their product via a single integration, reducing the hassle associated with new market launches. Tony Lee, chief brokerage officer at Alpaca, explained:
By adding event contracts to our platform, we can give partners a simpler way to expand their offerings through the infrastructure they already use to build and scale their businesses.
Tony Lee, CBO, Alpaca
Prediction Markets Remain a Point of Contention
Alpaca’s decision to venture into the prediction markets sector comes at a time of growth for the entire industry, despite the growing controversies surrounding it. The flexibility of prediction markets and the opportunity to make predictions about a variety of events have proved to resonate with players, with event contract volumes steadily growing.
However, US regulators, as well as commercial and tribal gaming industry representatives, have firmly rejected the prediction markets sector, insisting that it is essentially unregulated gambling.
As of the time of this writing, the legal status of prediction markets remains a point of contention, despite the CTFC’s staunch defense of the sector.