š° Just said Kalshiās market-making campaign could wash away wash-trading accusations, and now itās being ābitten backā: is the regulator fishing, or are the market makers pulling tricks?
Just a couple of days ago I talked about this, and now thereās new development. Kalshi denies the allegations of wash trading, and instead argues that its high-frequency trading in perpetual ether futures contracts as part of its market-making model is normal market behavior. However, the explanation has also raised fresh regulatory concerns. The root of the issue is that the crypto market-making mechanism itself makes high-frequency trading easily look like wash tradingāorders ping-pong back and forth, the price isnāt very sensitive, but in essence itās providing liquidity. Against the backdrop of regulators cracking down on high-frequency trading, Kalshiās defense has unfortunately hit the regulatorsā pain points. What does it mean? Regulators may start paying more attention to the specific transaction patterns of market makers, rather than bluntly treating everything as wash trading. For market makers as a whole, that means either learning to make trades āsmarter,ā or accepting higher compliance costs.
š” My take: In the short term, regulators will likely keep targeting Kalshi, but in the long run, if Kalshi can prove that its high-frequency trading genuinely serves market liquidity rather than manipulating prices, the incident could actually become a positive example pushing for compliance in crypto market making. If, as a result, regulators begin conducting systematic reviews of all market makers, this judgment would be nullified.
This article has no sponsorship from any project, and the author does not hold any of the assets mentioned
$BTC $ETH #BTC #ETH
ā ļø Not investment advice; predictions are for reference only
Just a couple of days ago I talked about this, and now thereās new development. Kalshi denies the allegations of wash trading, and instead argues that its high-frequency trading in perpetual ether futures contracts as part of its market-making model is normal market behavior. However, the explanation has also raised fresh regulatory concerns. The root of the issue is that the crypto market-making mechanism itself makes high-frequency trading easily look like wash tradingāorders ping-pong back and forth, the price isnāt very sensitive, but in essence itās providing liquidity. Against the backdrop of regulators cracking down on high-frequency trading, Kalshiās defense has unfortunately hit the regulatorsā pain points. What does it mean? Regulators may start paying more attention to the specific transaction patterns of market makers, rather than bluntly treating everything as wash trading. For market makers as a whole, that means either learning to make trades āsmarter,ā or accepting higher compliance costs.
š” My take: In the short term, regulators will likely keep targeting Kalshi, but in the long run, if Kalshi can prove that its high-frequency trading genuinely serves market liquidity rather than manipulating prices, the incident could actually become a positive example pushing for compliance in crypto market making. If, as a result, regulators begin conducting systematic reviews of all market makers, this judgment would be nullified.
This article has no sponsorship from any project, and the author does not hold any of the assets mentioned
$BTC $ETH #BTC #ETH
ā ļø Not investment advice; predictions are for reference only
