U.S. CFTC issues guidance on prediction markets, begins formal rulemaking

JH Kim

Summary

The U.S. CFTC said it has released guidance on prediction markets and begun the process of establishing formal rules.
It said the recommendations include how digital commodity merchants (DCMs) such as Kalshi, Coinbase, and Polymarket obtained approval for listed products.
Chair Michael Selig said the move marks the start of new rulemaking based on an interpretation of the Commodity Exchange Act and that the agency will exercise exclusive jurisdiction over prediction markets.

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The U.S. Commodity Futures Trading Commission (CFTC) has released guidance on prediction markets and launched the process to establish formal rules.

According to CoinDesk, a digital-asset (cryptocurrency) trade publication, on the 12th (local time) the CFTC described prediction-market platforms as “verified sources that provide reliable information to news outlets, sports leagues, financial institutions, and ordinary Americans.”

The recommendations include how digital commodity merchants (DCMs) such as Kalshi, Coinbase, and Polymarket obtained regulatory approval for listed products. The document also stipulates that these platforms should handle only trading contracts with low susceptibility to manipulation.

CFTC Chair Michael Selig said, “This action marks the start of a new rulemaking process based on a reasonable and consistent interpretation of the Commodity Exchange Act,” adding that it “also makes clear to Americans that the CFTC will exercise exclusive jurisdiction over prediction markets.”

However, the rules are expected to take several months before they are implemented, and the CFTC is currently soliciting public feedback on the direction of the regulation.