The US Commodity Futures Trading Commission (CFTC) has moved to defend its authority over prediction markets, filing a friend-of-the-court brief as state-level legal challenges against the sector intensify.
Summary
- The U.S. Commodity Futures Trading Commission filed a friend-of-the-court brief to defend its exclusive jurisdiction over prediction markets amid rising state-level legal challenges.
- Chairman Mike Selig said the agency has regulated prediction markets for over two decades and warned challengers: “We will see you in court.”
- The move comes as the U.S. Securities and Exchange Commission signals some event-based contracts may qualify as securities, while states like Nevada attempt to restrict platforms including Coinbase.
CFTC defends control of US prediction markets
In a video posted on X, CFTC Chairman Mike Selig said American prediction markets have faced “an onslaught of state-led litigation” over the past year. In response, the agency is stepping in to assert what it describes as its exclusive jurisdiction over these derivative products.
“Prediction markets aren’t new,” Selig said. “The CFTC has regulated these markets for over two decades.”
He argued that such markets play a valuable role by allowing Americans to hedge commercial risks, including temperature fluctuations and energy price spikes. He also suggested they function as a check on media narratives and broader information flows.
The legal battle comes as regulators debate whether certain prediction market contracts fall under securities or commodities law. The U.S. Securities and Exchange Commission recently warned that some event-based contracts could be classified as securities, potentially subjecting platforms to its oversight.
Meanwhile, states including Nevada have sought to restrict the operations of crypto-linked prediction platforms, though a Nevada court recently declined to block Coinbase from offering certain prediction market services.
The CFTC’s filing underscores escalating jurisdictional tensions between federal and state authorities, as well as between financial regulators. Selig emphasized that the agency intends to protect the “integrity, resilience, and vibrancy” of US derivatives markets.
“To those who seek to challenge our authority in this space, let me be clear,” he said. “We will see you in court.”
The case could have significant implications for the future of US-based prediction markets and their regulatory framework.
Source: https://crypto.news/cftc-fires-back-as-states-target-prediction-markets/