Connecticut Cracks Down on Crypto and Prediction Markets: Robinhood, Crypto.com, and Kalshi Ordered to Cease Operations

Connecticut Issues Cease-and-Desist Orders to Crypto and Prediction Market Platforms

The Connecticut Department of Banking has intensified its oversight of digital finance by issuing cease-and-desist orders to Robinhood Crypto, Crypto.com, and the prediction markets platform Kalshi. State officials allege these companies have been operating unlawfully without proper authorization and have failed to adhere to state regulations surrounding crypto and prediction markets.

Regulatory Action Against Online Platforms

On June 18, the Connecticut Department of Banking released formal orders requiring the three companies to immediately halt their services within the state. The Department clarified that Robinhood Crypto and Crypto.com had not secured the necessary licenses to legally offer their crypto services to Connecticut residents. Meanwhile, Kalshi was targeted for allegedly providing unauthorized gambling by operating an event contracts market, which is forbidden under state law without approval.

Details on the Companies Involved

Robinhood Crypto

Robinhood Crypto, the digital asset arm of the popular trading app Robinhood, has been cited for conducting business in Connecticut without first gaining a money transmission license, as required for handling cryptocurrency transactions. The Department of Banking emphasized that offering crypto trading in the state without this license put consumers at risk because state oversight was circumvented.

Crypto.com

Likewise, Crypto.com, a leading global crypto exchange, was accused of failing to obtain state authorization to offer crypto services. The platform, which provides trading and related services to millions worldwide, has been directed to cease operations in Connecticut until it secures proper regulatory approval.

Kalshi

Prediction market operator Kalshi also came under the spotlight. Kalshi enables users to wager on the outcomes of current events and economic indicators. Connecticut authorities have classified such offerings as gambling, and under state law, Kalshi lacks the necessary permissions to function as a gambling operator. The cease-and-desist order specifically cited Kalshi’s operation of unauthorized gaming services.

The Regulatory Context in Connecticut

Connecticut’s actions reflect a growing trend among U.S. states to exert tighter control over the rapidly evolving digital finance sector. The Department of Banking noted that these enforcement measures are meant to safeguard residents from unlicensed financial services and maintain the integrity of state-regulated markets.

Licensing and Consumer Protection

State officials underscored the importance of financial service providers complying with local licensing requirements. Such oversight ensures that entities adhere to standards designed to protect consumers, manage risk, and foster market stability. According to the Department, failure to submit to regulatory scrutiny can result in financial losses or legal uncertainties for residents engaging with unlicensed firms.

Crypto and Gambling Regulations

Connecticut has specific licensing rules for cryptocurrency enterprises and distinct regulations for gambling and betting. Any entity offering event-based contracts deemed as wagers must first receive gaming approval. The recent actions highlight the state’s intent to enforce these requirements, keeping event prediction markets and digital asset exchanges within legal bounds.

Industry and Legal Implications

This enforcement wave could have significant consequences for digital finance firms seeking to enter the Connecticut market. For companies like Robinhood Crypto and Crypto.com, the inability to serve Connecticut’s residents may impact user growth and business expansion strategies. Moreover, the move signals to other market participants that strict compliance with state regulations is mandatory, regardless of federal or global operations.

Broader U.S. Regulatory Landscape

Connecticut’s decision is part of a broader trend in the United States, where states are independently enforcing crypto and online gambling regulations. Several state and federal agencies have recently increased scrutiny of crypto exchanges, prediction markets, and other digital financial instruments to address perceived risks to consumer protection and market integrity.

Kalshi, in particular, has faced ongoing challenges with regulatory authorities in multiple jurisdictions. While the company positions its product as a financial – rather than gambling – tool, several U.S. states interpret non-sports event-based contracts as forms of illegal gambling unless specifically licensed.

Potential Paths Forward for Affected Firms

Companies subject to these orders have various options, including pursuing local licensing, ceasing operations in the state, or challenging the enforcement actions through legal avenues. Both Robinhood Crypto and Crypto.com have previously secured licenses in other states and remain active in complying with evolving U.S. regulations. Whether these firms will adjust their models to satisfy Connecticut’s requirements remains to be seen.

Legal Proceedings and Appeals

Under state law, the companies affected by the cease-and-desist orders are typically entitled to an administrative process where they may contest the allegations or negotiate corrective measures with regulators. Such proceedings may set important precedents for how prediction markets and crypto exchanges will be treated in Connecticut and other states in the future.

Implications for Consumers and the Market

For Connecticut residents, the immediate effect is the suspension of services from the named companies. Consumers who held assets or ongoing positions with these platforms may face delays or restrictions in accessing their funds until regulatory matters are resolved. The state’s efforts are framed as consumer protection, yet may temporarily limit options for accessing cryptocurrency and prediction market products locally.

The regulators encourage consumers to verify that any platform offering digital asset or gaming services in Connecticut is duly licensed. Failure to do so may expose users to unregulated operators and associated risks.

Looking Ahead: The Future of Digital Finance in Connecticut

The cease-and-desist orders represent a clear signal that Connecticut is prepared to enforce its financial and gaming laws in the digital economy, even as technological innovation outpaces regulatory norms. As crypto and prediction markets continue to grow in popularity, industry participants will need to closely monitor and adapt to the evolving U.S. regulatory environment to maintain their access to key markets.

Future developments will be closely watched by both industry and regulators, as the intersection of crypto, prediction markets, and state law remains a frontier for legal and commercial innovation in the United States.