US Commodity Futures Trading Commission (CFTC) Chairman Michael Selig has expressed support for prediction markets combined with blockchain technology, saying they can become powerful tools for uncovering the truth.
On Monday, in a speech at the FIA Global Cleared Markets Conference in Boca Raton, Florida, Selig argued that prediction markets, also known as event contracts, can provide valuable signals about future events when participants back up their views with money, describing well-functioning markets as “truth machines.”
“When participants express views on future events – and support those views with capital – they ensure accountability, transparency and information,” Selig said. He added that highly liquid prediction markets often generate signals that the public increasingly perceives as more reliable than time-honored opinion polls.
“The reality is that prediction market platforms are currently perceived by the public as more accurate than political polls,” Selig said, pointing to the 2024 U.S. presidential election as an example where market valuation reflected the scale of the outcome.
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US States Take Legal Action Against Prediction Markets
Selig’s support for prediction markets comes after several U.S. states have taken legal or regulatory action against these platforms, arguing that their event-based deals are akin to unlicensed gambling.
Last week, two U.S. federal court rulings allowed Nevada state regulators to continue taking legal action against forecast marketplace platforms Polymarket and Kalshi. In February, the state sued Kalshi after the sports prediction marketplace company lost a lawsuit seeking to stop the state regulator from taking action on sports prediction markets.
Massachusetts also took action, filing a lawsuit against Kalshi over sports forecasting deals offered to residents. Meanwhile, Connecticut regulators issued cease-and-desist letters to Kalshi and Robinhood, ordering them to stop offering certain event contracts tied to sports performance.
The CFTC chairman said the agency plans to provide clearer rules for listing and trading event contracts within a framework set by the regulator. He said staff were directed to develop draft guidelines outlining how these markets should operate while maintaining compliance with applicable derivatives regulations.
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CFTC Chairman Plans Clearer Classification of Crypto Assets
Selig also said the CFTC plans to develop a clearer framework for classifying crypto assets and provide guidance on applying the rules to developers of software without storage capabilities, such as digital wallets and decentralized finance applications.
He maintained that the agency should focus on clear rulemaking rather than ambiguity and enforcement-first policies, claiming that “America is now the cryptocurrency capital of the world.”
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