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Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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The US Commodity Futures Trading Commission (CFTC) on Wednesday announced that it will convene a public roundtable in the coming weeks to discuss and refine its regulatory approach to prediction markets.
Consequently, this initiative may impact platforms like Kalshi and Polymarket as the agency seeks to modernize oversight in the market.
Acting Chairman Caroline Pham criticized the previous administration for its sluggish, anti-innovation policies that, in her view, have hampered the agency’s ability to implement common-sense regulations for prediction markets.
She explained that unnecessary delays and outdated approaches have stifled progress in modernizing oversight.
These platforms—where participants wager on future outcomes, such as elections—are increasingly intertwined with the crypto industry, further underscoring the need for a more agile regulatory framework.
CFTC Criticized for Inflexibility as Prediction Markets Gain Ground
At the peak of the 2024 election cycle, Polymarket quickly became a go-to platform for political betting. Further, the site captured the interest of both crypto enthusiasts and politically active investors.
Pham pointed out that she had long opposed former Chairman Rostin Behnam’s strict enforcement against prediction markets, including bets on sports and US political outcomes. However, the agency has moved too far down that path to change course easily, she added.
She criticized the approach as overly cautious and resistant to innovation. Additionally, she argued that delays and rigid policies have locked the agency into an inflexible framework. Further, she lamented that past decisions now constrain efforts to adopt a more adaptable regulatory model.
“Prediction 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,” she said. “The CFTC must break with its past hostility to innovation and take a forward-looking approach to the possibilities of the future.”
She explained that the roundtable is a vital first step toward crafting a comprehensive regulatory framework. This framework will encourage flourishing prediction markets while protecting retail customers from binary options fraud, such as deceptive marketing and abusive sales practices.
The event will take place at the Conference Center at the CFTC’s headquarters at Three Lafayette Centre, Washington, D.C. The agency will share more details once plans are finalized.
Reports indicate that the Trump administration plans to expand the CFTC’s role by placing the digital asset market under its oversight while reducing the SEC’s influence over the industry.
Recently, the CFTC launched a review of both Crypto.com and prediction market Kalshi. The regulator questioned whether their sports events contracts complied with derivatives regulations.
Kalshi’s prediction platform, which launched shortly after Trump’s inauguration, has already generated over $2.4m in trading volume. Notably, on Jan. 24, the platform introduced a market predicting the Super Bowl winner between Kansas City and Philadelphia.
