The nomination process for the chair of the U.S. Commodity Futures Trading Commission (CFTC) has recently attracted market attention. According to reports, the White House is considering several candidates to replace the previously nominated Brian Quintenz, with former CFTC director and Kalshi lawyer Josh Sterling seen as a supporter of the prediction markets.
Background and Current Status of CFTC Chair Nomination
Brian Quintenz was previously nominated by the White House as CFTC Chair, but his nomination process is currently stalled. According to reports, the Winklevoss twins have urged the postponement of the nomination process, making the appointment uncertain. Quintenz has repeatedly stated during his tenure as a CFTC commissioner that sports event contracts should be under federal rather than state jurisdiction.
Before the cryptocurrency and prediction markets regulation roundtable meeting to be held next Monday, speculation about the White House possibly changing the nominee has been increasing. Bloomberg reported last week that President Trump is considering potential successors for the position.
Candidate Josh Sterling
According to Semafor, Josh Sterling, a partner at Milbank LLP in Washington D.C., is under review by the Trump administration. Sterling has represented the prediction market platform Kalshi in several cases over the past 18 months.
During his previous tenure at Zuckerman Spaeder LLP, Sterling represented Kalshi in the KalshiEx LLC v. CFTC case. In this case, the legal team argued that the derivatives regulatory agency should not prohibit so-called "Congressional control contracts," which allow clients to predict which party will win control of both houses in the 2024 elections.
Sterling's Stance on Prediction Markets
In July this year, Sterling represented Kalshi at the National Council of Legislators from Gaming States Summer Meeting held in Louisville. He stated at the event that courts have no right to decide whether market participants use contracts for speculation or hedging.
Sterling also compared sports contracts to commodity derivatives like WTI crude oil futures, noting that no state has regulated wheat derivatives until 2025. He believes this is an industry-wide issue, not related to specific events.
Other Potential Candidates
In addition to Sterling, other candidates are being considered for their experience in crypto affairs. Mike Selig, who has limited expertise in prediction market litigation and regulation, was appointed in March as the chief legal advisor to the newly established cryptocurrency task force of the U.S. Securities and Exchange Commission.
Selig's career began as an intern at the CFTC and is considered a protégé of former chairman Chris Giancarlo. Giancarlo is the author of the book "CryptoDad" published in 2021, which the Winklevoss twins attended its launch.
Another candidate, Williams, focuses on cryptocurrency regulation rather than prediction markets. In February this year, the U.S. Treasury appointed Williams as the policy advisor for digital assets and blockchain technology to Treasury Secretary Scott Bessent. Before joining the Treasury, Williams served as the global policy head of the digital asset company Galaxy Digital.
Nomination Process and Impact Analysis
The appointment of the CFTC Chair will have a significant impact on the regulation of the U.S. derivatives and prediction markets. The current interim chair of the CFTC, Caroline Pham, has announced that she intends to resign after her successor is appointed.
The different backgrounds and positions of the candidates mean that the outcome of the appointment could lead to different regulatory directions. Supporters of the prediction markets may prefer Sterling's appointment, while other candidates may bring a focus on cryptocurrency regulation.
Industry Impact and Future Outlook
The appointment of the CFTC Chair comes at a critical time for the regulation of the U.S. derivatives market. As emerging areas such as prediction markets and cryptocurrencies develop, regulatory agencies face new challenges and opportunities.
Regardless of who the final choice is, the new chair will need to balance innovation with risk management, creating a regulatory framework suitable for market development. This appointment decision could have a profound impact on the direction of the U.S. derivatives market in the coming years.
