Kalshi Prime pitches RIAs perpetual futures with crypto-backed loans for eligible investors

Kalshi Prime and BitGo announced HODL Margining, a product that lets eligible investors borrow against cryptocurrency holdings to fund futures trades instead of selling the assets. The loans are made by Kalshi Katalyst, a Kalshi affiliate that, unlike the Kalshi Prime futures business, is not regulated by the Commodity Futures Trading Commission or the National Futures Association.

The account that places the trade sits with an NFA-supervised futures commission merchant; the loan that funds it sits outside that perimeter. Kalshi Prime is an FCM, which Bandman described as the closest equivalent in the securities world to a broker-dealer. Broker-dealers answer to Finra and the SEC; FCMs answer to the National Futures Association, a self-regulatory organization.

Kalshi Prime chief executive Jeff Bandman told Financial Advisor that customers set up accounts with Kalshi Prime directly. He said the firm also has structures in which introducing brokers bring trades to it.

The product line is perpetual futures, with contracts tied to individual stocks planned, which Bandman pitches as tools for hedging, shorting and customizing market exposure.

Bandman is a former senior CFTC official who helped establish LabCFTC and secure Kalshi's federal exchange designation in 2020. He told the magazine the agency "did not have an innovation problem," and that the founders "weren't trying to avoid regulation"; the difficulty, he said, was that people did not understand how to work with a regulator.

For an RIA, the two-entity structure is the part of the announcement worth slowing down on. The announcement names "eligible investors" as the borrower class, and the coverage does not describe what that eligibility requires. The perpetual futures pitch is the visible product; the decision underneath it is whether to route client crypto collateral to a lender outside the perimeter that supervises the account placing the trade.