Kalshi has asked the Commodity Futures Trading Commission (CFTC) for permission to let traders put on leveraged positions with borrowed money.The exchange said that the change is meant to bring institutional money into event contracts that today must be paid for in full.If the request is granted, it would hand large trading firms a tool that is routine in stock and derivatives but has never been allowed on a regulated U.S. event-contract venue.The filing was submitted on Tuesday, September 22, by Kalshi Klear, the company’s in-house clearinghouse. Why does Kalshi want to remove the full collateral wall?The current mode of operation is that anyone holding a position on a regulated U.S. event-contract exchange has to back it with cash covering the entire trade. However, this changes when margin enters into the equation. It lets a trader control a larger position than their own money would allow by borrowing against it. Kalshi’s pitch is that the current all-cash requirement keeps big players out of contracts that settle months down the road.The company said in a memo that letting institutions borrow would make those longer-dated markets worth their while. Kalshi also proposed a tiered system where the closer a contract gets to its settlement date, the more collateral a leveraged trader would have to post to keep the position open.Margin would not be extended to sports contracts, and it would be off the table for what Kalshi calls its culture and “mention” markets. A spokesperson said that if the CFTC agrees, the borrowing would be available only to self-clearing members who meet set capital minimums through their direct relationship with Kalshi Klear.A dominant book with a strange trading patternKalshi handles more than 90% of U.S. prediction-market activity, and its annualized trading volume jumped from $52 billion to $178 billion in six months. DefiLlama data shows that it has an open interest of over $945 million, and its off-chain volume over the past 30 days is over $12.7 billion.All these show that it already has volume to build on; however, it does not paint the whole picture. A recent analysis of Kalshi’s public trade records found that a handful of repeating trade sizes drove more than half the value on its bitcoin and ether perpetual-futures markets. Between Sept. 17 and Sept. 20, trades within $2 of $5,499 made up $7.7 million, or 57%, of the ether-perp volume that was sampled. On bitcoin, recurring trades of roughly $2,500 and $5,000 accounted for 54% of the sampled activity.The Coindesk analysis also found recurring fixed-dollar clips in 43 of 46 one-hour samples going back to June 19. This is a signature that fits automated programs firing predetermined amounts. The findings raise the question of how much of Kalshi’s headline volume comes from a small group of participants, especially as the potential of margin enters the mix.Leverage as the next step in a fast expansionThe margin request is the latest in a run of moves that have pushed Kalshi beyond yes-or-no bets on real-world events. It already offers leverage on its perpetual futures, and it cleared the CFTC to launch gold and silver perps this month. Perps has done over $44 billion in notional volume after debuting in crypto in late May. The addition of those precious metals to its perp lineup is a signal of what is to come, as it has also filed to add perps on U.S. equities, copper and foreign currencies. It also rolled out a professional trading terminal with deeper order-book data.Kalshi is not alone in chasing institutions. Rival Polymarket moved in July to secure the licenses it would need to eventually offer margin on U.S. event contracts. Meanwhile, Kalshi has gone abroad, teaming with brokerage-infrastructure startup Alpaca to reach users outside the U.S. and with Wealthsimple to enter Canada.The regulatory fight the filing does not settleWhile Kalshi is awaiting the CFTC’s answer to its filing, it is also fighting other battles on various fronts. The most persistent has been Kalshi’s fight with states on its sports contracts. Connecticut sued the exchange in August, as it does not accept the labeling of its sports contracts as federally protected derivatives. The state considers the contracts as unlicensed betting. A Michigan judge signed an order on Sept. 1 threatening penalties of up to $500,000 a day if Kalshi keeps offering sports markets there, as Cryptopolitan reported. New Jersey has gone to the Supreme Court to get the final ruling on who governs these markets, the CFTC or the states.So, it is not surprising that sports contracts were missing in the margin filing. Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.