Today, Crypto.com announced the creation of OG.com, a stand-alone prediction markets startup that will be backed by the parent company's Derivatives North America (CDNA) division.

OG.com has the licensing required to operate a prediction market in the United States because CDNA is registered with the Commodities Futures Trading Commission (CFTC). Crypto.com reports that during the last six months, their independent prediction markets platform has grown by 40 times every week.

"Crypto.com successfully built one of the largest brands and best app experiences in cryptocurrency during a period of hypergrowth amid a complex regulatory landscape, and now we will work to replicate this experience with OG in the prediction market space,” said CEO and co-founder Kris Marszalek in a statement.

Nick Lundgren, Chief Legal Officer at Crypto.com, will lead OG.com as CEO. In late 2024, he spearheaded the cryptocurrency broker's entry into sports event contracts, which featured a number of event contracts on the Super Bowl and the NFL playoffs that year.

Margin Trading Will Be Available on OG.com

Being the first platform of its sort to provide margin trading—the practice of borrowing money from a broker to buy more securities—OG.com is setting a new standard.

In order to engage in margin trading, clients must normally apply for margin accounts and post collateral, which is typically other liquid securities that are easily liquidated in the event that the customer becomes overly involved. Interest must also be paid by the account holder on margin accounts. The press announcement made no mention of the interest rate on OG.com margin accounts.

“Under Reg T, a Federal Reserve Board rule, a trader can borrow up to 50% of the purchase price of securities that can be purchased on margin, also known as initial margin. Some securities have a higher margin requirement, thereby lowering the percentage that can be borrowed against the security,” according to Charles Schwab.

Market participants, including retail, use margin trading extensively across traditional asset classes. However, the idea of borrowing money to finance trading in prediction markets may draw criticism from those who argue that young retail traders who embrace event contracts are already taking on excessive risk.

The launch of OG.com might be timely

OG.com is launching at a time when the growth of prediction markets is quickly accelerating and both Wall Street and Main Street are investigating event contracts for novel usage cases that go beyond simple betting.

“While plenty of long-term risks can be debated, we think the use cases for prediction market contracts are much too powerful to be downplayed,” wrote Deutsche Bank analyst Brian Bedell in a note to clients today. “These include the potential for material alpha generation for investors (both retail/institutional and via speculation and hedging), a rising value placed on knowledge, and greatly enhanced quantity/quality of data and analytics.”

He projects that the number of event contracts in the US will increase from over 50 billion last year to over 1 trillion contracts by 2027.