CFTC to set ‘rules of the road’ for prediction markets, Chair Selig says
The CFTC issued guidance for prediction markets, with Chair Selig confirming regulators are establishing clearer rules to prevent market abuse.Summary
The U.S. Commodity Futures Trading Commission (CFTC) released new guidance reminding exchanges listing event-based derivatives, or prediction market contracts, that they must adhere to existing Commodity Exchange Act requirements. Chairman Mike Selig stated that regulators are working to establish clearer "rules of the road" for this rapidly growing sector to prevent manipulation and insider trading.
The guidance emphasizes that exchanges designated as contract markets are the first line of defense in ensuring listed contracts are not susceptible to manipulation. Regulators highlighted heightened risks for contracts tied to narrowly defined sports outcomes, echoing recent controversies, including large earnings on a contract related to potential U.S. strikes on Iran and backlash over a contract concerning the Iranian Supreme Leader's status following his death.
This regulatory push coincides with the rapid growth of prediction markets like Kalshi and Polymarket, which are reportedly exploring valuations near $20 billion, and follows a recent memorandum of understanding between the CFTC and SEC to coordinate on crypto policy.
(Source：The Block)