The landscape of the capital markets is rapidly shifting and the lines between track by crypto as well as disruptive tech are also merging and not surprisingly, we're witnessing an explosion in terms of prediction markets fueled by the 2026 World Cup as well as NBA Finals.
Over $5 billion have traded across regulated as well as decentralized platforms pushing intraday trading volumes to record highs.
Now this growth has ignited a regulatory war.
The group has just sued the CFTC to block trading for features on Ust exchanges while the federal government finds itself in an unprecedented lawsuits with states trying to ban prediction contracts altogether while the nation's capital does move to wrap stable coins and new anti-money laundering laws, exchanges are rapidly pushing into gen commerce, utilizing artificial intelligence agents to battle test financial contracts as well as design all day investing.
Portfolios.
Well joining me as we kick off a new trading week is Rob Hadick, General Partner at Dragonfly, a global crypto investment firm.
Rob, good morning.
Thank you so much for joining us.
Good morning.
Thanks for having me.
Well, there are a lot of headlines to get through, so first and foremost, I do want to get your take on what's happening when it comes to prediction markets.
Yes, so I could tell by the intro that this is the hottest topic that's out there right now.
Everybody's interested, as you mentioned.
Prediction markets are about to see their best month ever.
Partly fueled by the World Cup and by the NBA Finals, but also just fueled by institutional interest as well.
We saw a block trade for compute futures actually trade through Falcon X and get placed on Polymarket earlier this year.
It was an institutional counterparty on the other side.
We saw Galaxy do something similar on Calci earlier, I think it was late last month, and we started to see a real interest across all types of counterparties.
And so Polly Market and Calci are both going to have their best months ever.
I think Polly Market did over $3.5 billion of volume last week.
Calci did over $4 billion.
Rothera, which is the Susquehanna and the Robinhood joint venture, they're actually growing quite quickly as well as they take some of that Robinhood flow, and we're going to see this market continue to grow very quickly into the end of the year.
Today, what has been very much a retail-driven market is going to become more institutional.
We're seeing that happen right now.
I don't think there's any stopping the growth in this market today.
Yes, and I do want to expand on that because as someone who is on the venture capital side, you have to navigate the regulatory expectations as well.
So what are you seeing and what do you think should happen when it comes to jurisdiction?
So it's pretty clear to me that these are transfers of risk.
These look like binary options.
They should be traded in CFTC regulated entities here in the US, and there's different regulatory regimes globally.
And so the CFTC has made that very clear, and Chair Selig has done a very good job moving quickly to try to come and regulate these markets, to talk about the ways in which they should be regulated, and the CFTC has put their Put the weight of the US government behind their backs and into the state government lawsuits that the states have put out there.
We're excited about what that regime is going to look like.
We expect that the CFTC will continue to push this forward, and from my perspective, when you think about it technically how these markets exist, it's very clear that the tools that are needed to regulate them exist at the CFTC and not at the state.
Level and so we're going to continue to see that conversation and we might see a little bit more focus on the micro, meaning what markets should be regulated by the states or what markets should be regulated by the federal government, but in my mind that creates the sort of hodgepodge of regulatory infrastructure that makes it really hard to protect consumers and to push forward innovation.
So we're very supportive of the CFTC.
Put together a couple comment letters as they've asked for comments from the public, and we're excited to see where that goes.
Yes, and you brought up an important point, and that is consumer protection.
So when it comes to risk mitigation, when we're at the airport or when we're on our phones, we might be bombarded by some of these ads out there when it comes to prediction markets.
So what do you think needs to happen?
There's clear guidelines about how trading activity should be marketed to the general public, right?
And so production markets are no different.
These are venues that allow us to trade derivatives, and so we should be regulated and they should be regulated in the same way in the way that they come and, you know, market to us and market to maybe different types of consumers across different states, different ages, etc.
And that will probably change across markets as well.
So you have to make sure that there's no guarantee of when you're very clear on what the risks involved are, and I expect that to kind of get refined.
I think people forget that these are new markets, so both Calci and Poly Market have been operating for 678 years now, but they're really just coming to the public eye over the last year, really.
And so how they get regulated, how they get marketed is.
To continue to change and evolve as with any new business and any kind of upstart business.
Yes, and speaking of new businesses in terms of what may look new to the public or the consumer, I do want to get your take on tokenization as well as stablecoins here stateside, and this has come on the heels of the announcement between ICE as well as OKX this morning.
You mentioned JB's earlier, so give us your quick take when it comes to stablecoins as well as tokenization.
So what we started to see is Stablecoin's an organization that both started to play that infrastructure layer, and so it doesn't actually matter if you or I know that something is tokenized or stablecoin is really just a tokenized US dollar in a lot of ways.
And so Zelle USD, which Zelle is early warning, which is sort of a bank consortium which makes it easy for you to transfer capital across all of your different banks here in the US, they just announced that they're offering a stablecoin called Zelle USD to do remittance to India.
Actually, and for those customers, they won't actually know that there is a stablecoin underneath.
They will just know that now as a Zelle customer, I can send almost instantaneously money from here in the US to India and vice versa.
That's the unlock that we're seeing.
The tokenization side is even kind of the next step because now all of a sudden you have global access to US capital markets and you're able to do collateral management across a bunch of different types of markets.
You're able to trade on a 24/7.
And you're able trade on the weekends and that allows for a better user experience for that end customer and they may not need to know that the end person actually it's actually a tokenized asset.
Now there's going to be real continued innovation and we saw Coinbase talk about this in their announcement last week around legal rights underneath them, you know, is it an SPV structure?
Is it directly primarily issued on chain?
That's going to continue to evolve, but again, we're early days.
Yes, and finally, before I let you go, I do want to get your.
Take on agentic AI and Agentic commerce in particular.
So when it comes to what you're doing at Dragonfly and deploying capital, how are you looking at the future of agentic commerce?
Yes, so it's early, but it's taking up a lot of air in the room.
Same with prediction markets.
We haven't seen a lot of volume yet on things like X 402 or MPP.
Those are the kind of payments protocols that Stripe and Coinbase have put together saying, hey, we want to do agentic payments.
But what we have seen is we've seen.
A lot of startups.
We've seen a lot of innovation.
We've seen people say, hey, we believe that in the future there's going to be probably the majority of commerce is going to happen by agents.
There's about 2 weeks ago we actually saw the amount of internet traffic that is done by agents or is automated relative to human driven actually flipped.
So there was more internet traffic by agents 2 weeks ago than there was humans.
That tells you it's a little bit of a harbinger of things to come on.
What's going to come in the future as you start to think through the type of economic activity that should exist in AI.
So when it comes to timeline with Agentech commerce, what are you expecting?
And for consumers out there who are wondering about consumer protection as well as what the future will look like, what would you say to them?
Well, it's going to be a fun ride today.
The people who are doing it are kind of power users, and they understand that they might lose a little bit of money.
I would say people should wade in very carefully, but we're going to Start to see businesses built on top that have kind of consumer protection built in and as those start to become more mass market, we're going to see people really operate agenttically, I think probably for the majority of their economic lives in the future, but it's early and so I wouldn't expect your average consumer to really be seeing the effects of this for another year and a half.
Well, Rob, always great talking to you.
Thank you so much for joining us this morning and for weighing in on a host of topics today.
Thanks for having me.
Thank you.
