BitGo and Susquehanna unlock institutional access to OTC crypto prediction markets in the United States

In a move that could reshape how big investors interact with prediction markets, BitGo and Susquehanna Crypto have announced a partnership.

Their goal is to give hedge funds, family offices, and other institutional players over-the-counter (OTC) access to event-based contracts using crypto or stablecoins held in custody.

The collaboration allows trades to stay on BitGo’s platform, with liquidity supplied by Susquehanna.

This setup means institutions can make bilateral trades without moving assets off-platform or converting crypto holdings, including Bitcoin, into cash.

Trades are documented using derivatives-style agreements, and minimum sizes start at $100,000.

How Institutional Prediction Markets Work

Prediction markets let participants buy and sell contracts linked to real-world events, with contract prices reflecting the probability of a certain outcome.

These events can range widely—from sports and politics to short-term movements in Bitcoin or even weather conditions.

Historically, institutional involvement has been limited because platforms lacked custody solutions, collateral management, and robust trading infrastructure.

By integrating BitGo’s custody services with Susquehanna’s liquidity, large investors now have a safer, more seamless way to participate.

Regulatory Storm Clouds Over US Markets

Despite growing interest, prediction markets face increasing scrutiny in the United States.

At least 11 states have targeted platforms like Kalshi, claiming they operate as unlicensed gambling venues.

Recent developments include a Nevada state court temporarily banning Kalshi on March 20, following a federal appeals court denying the platform’s emergency request.

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In Arizona, criminal charges were filed alleging illegal betting on elections and sports, which Kalshi’s CEO Tarek Mansour called a “total overstep.”

Meanwhile, other states are exploring legislation to bring prediction markets under gaming laws.

Utah’s proposals would classify certain contracts as gambling, while Pennsylvania is considering regulation that would include a 34% revenue tax under state gaming authorities.

Federal Oversight and Safeguards

Not all regulatory efforts have succeeded.

In Tennessee, a federal judge ruled in February that Kalshi’s contracts fall under the Commodity Exchange Act, placing them under CFTC oversight rather than state gaming regulators.

Concerns about insider trading have also prompted platforms like Kalshi and Polymarket to introduce stricter rules, preventing participants with direct influence over outcomes from trading.

The CFTC is currently seeking public feedback on how prediction markets should be regulated, signaling potential nationwide rules on the horizon.

Impact and Consequences

This partnership could open a new avenue for institutional participation in markets that were previously dominated by retail traders.

By providing custody-backed contracts and liquidity, BitGo and Susquehanna are reducing operational risk and making prediction markets more appealing to large-scale investors.

However, regulatory uncertainty remains a major risk.

States taking aggressive action against prediction platforms could limit growth, and unresolved legal disputes may create compliance headaches for new institutional entrants.

The combination of innovation and regulation will likely shape whether prediction markets can scale within the United States.

What’s Next

Institutions will watch closely how regulators respond to this new OTC offering.

Meanwhile, BitGo and Susquehanna plan to roll out their service to qualified clients, providing a structured, collateralized way to trade prediction market contracts.

On the regulatory side, the CFTC’s upcoming rulemaking could set the tone for nationwide adoption or restriction.

Summary

BitGo and Susquehanna’s new partnership aims to bring OTC prediction market trading to institutional clients, combining custody services and liquidity support.

While this opens the door for larger players, ongoing legal and regulatory scrutiny in the US creates uncertainty for the sector’s future.

Bulleted Takeaways

• BitGo and Susquehanna are offering OTC access to prediction market contracts for institutions
• Trades can use Bitcoin or stablecoins held in custody without moving funds off-platform
• Minimum trade sizes start at $100,000 with contracts backed by crypto collateral
• Prediction markets track real-world events including sports, elections, and cryptocurrency prices
• Regulatory challenges are mounting in at least 11 US states, with bans and criminal charges against platforms like Kalshi
• Tennessee courts ruled prediction contracts fall under CFTC oversight, not state gambling laws
• Platforms are introducing stricter rules to prevent insider trading and manipulation
• Federal rulemaking by the CFTC may define nationwide regulations for prediction markets