The US Commodity Futures Trading Commission (CFTC) is set to hold a public roundtable in the coming weeks to assess its regulatory approach to prediction markets.
The discussions could have significant implications for platforms like Polymarket and Kalshi, which faced controversies around regulatory compliance.
Gathers Input on Prediction Market Regulation
The roundtable follows the CFTCโs recent inquiry into sports-related event contracts and aims to gather perspectives from market participants, legal experts, and industry stakeholders.
Sponsored
The roundtable aims to build a comprehensive administrative record, gathering studies, data, expert reports, and public input from diverse stakeholders to guide the Commissionโs approach to regulating prediction markets.
Calls for a New Approach
Under the previous administration, the CFTC increased its oversight of event contracts, cryptocurrency derivatives, and decentralized finance (DeFi).
โUnfortunately, the undue delay and anti-innovation policies of the past several years have severely restricted the CFTCโs ability to pivot to common-sense regulation of prediction markets,โ said Acting Chairman Caroline D. Pham.
She criticized the commissionโs past stance, calling it a “sinkhole of legal uncertainty” that stifles innovation. Pham also advocated for a forward-looking approach that balances regulatory oversight with market growth.
โPrediction markets are an important new frontier in harnessing the power of markets to assess sentiment to determine probabilities that can bring truth to the Information Age,โ Acting Chairman noted. โThe CFTC must break with its past hostility to innovation and take a forward-looking approach to the possibilities of the future.โ
Gain Popularity Amid Rising Ethical Concerns
Prediction markets like Polymarket and Kalshi are gaining traction for their ability to gauge public sentiment on future events.
However, while offering real-time insights, they also raise concerns over regulation and market manipulation.
Kalshi, a CFTC-regulated market, faces regulatory challenges over political betting contracts and ethical concerns.
Meanwhile, Polymarket, a blockchain-based platform, was fined $1.4 million in 2022 for offering unregistered options, raising market manipulation concerns.
During the 2024 US presidential election, Polymarket gained attention as a key tool for traders tracking Donald Trumpโs political chances, with market shifts responding to polling and legal developments.
However, its prominence led to legal scrutiny, culminating in a November 14 raid on CEO Shayne Coplanโs home, which the company described as “political retribution” after users accurately predicted Trumpโs victory.
Why This Matters
The CFTCโs review could redefine prediction market rules, impacting platform operations and expansion. The decision may set a precedent for financial markets and decentralized forecasting.
Check out trending DailyCoinโs articles:
