The U.S. Commodity Futures Trading Commission (CFTC) will vote Friday to formally reject event contracts that bet on the outcome of political campaigns, in an effort to ban U.S. customers from platforms that allow trading in predictive contracts. It started.
The agency has been engaged in years-long legal battles with these companies, and a proposed rulemaking approved by three Democratic appointees to the U.S. Derivatives Agency would make trading based on political outcomes “against the public interest.” The contract is legally considered to be an illegal contract. About war, terrorism, and assassination. Officials also noted that the CFTC is not a gambling regulator and does not have the ability to ensure market integrity in this area.
Prediction platforms such as PredictIt, Polymarket, Zeitgeist, and Kalshi are popular in the cryptocurrency industry, offering users the opportunity to buy contracts on the outcome of real events such as elections or policy developments. Buyers place a yes or no bet, and if it’s right, they make a profit, and if it’s wrong, it costs them money. Under the proposal, U.S.-regulated companies would be prohibited from contracting for the outcome of political contests, award contests, and games.
“Contracts around political events ultimately become commodified and undermine the integrity of America’s unique experience of participating in the democratic electoral process.” Chairman Rostin Behnam argued: inside friday meeting. “Frankly, such a contract would place the CFTC in the role of election observer.”
Behnam had The signal went out in March. The proposal is scheduled and the draft rule submitted today still needs to go through a 60-day public comment period and approval process for the final rule.
At Friday’s meeting, Commissioner Caroline Pham, one of the opponents of the proposal, called it an “astonishing overreach.” He also criticized the agency’s legal and enforcement record and suggested the need for a review of the regulator by the Government Accountability Office.
“A third-party review will help us get back to basics and get back on track,” Pham said.
Commissioner Summer Marsinger also voted against the proposal.
Commissioner Christie Goldsmith Romero called the agency’s enforcement staff’s absence from Friday’s meeting a “dereliction of duty” because the rule had such important enforcement aspects.
Brian Quintenz, a former CFTC commissioner and current head of policy at digital asset investment firm a16z Crypto, said in an email to CoinDesk that the move represents “bad government.”
“Instead of regulating these new markets and allowing them to thrive responsibly, the European Commission will simply ban most of them. Financial regulation should be based on data and law, not ignorant bias.” Furthermore, the Commission has created significant uncertainty and has already pushed individuals who need these risk management tools offshore and into unregulated locations, potentially exposing consumers to significant harm. ing. ”
Nikhilesh De contributed reporting.
