The U.S. Commodity Futures Trading Commission is pushing its new regulatory agenda for predictive markets at an unprecedented pace. Just days after Chairman Michael Selig delivered a comprehensive speech last week, the CFTC formally announced on Wednesday the withdrawal of a proposed rule on event contracts for 2024, and an internal advisory notice on legal considerations for predictive markets set for release in 2025. This move is interpreted as a significant shift in regulatory stance, aimed at clearing some obstacles for the contentious predictive market platforms. Chairman Selig stated that the withdrawal reflects the CFTC's commitment to "legitimate market innovation" and criticized the previous proposals as "a frivolous foray into value regulation". This clear signal could not only reshape the legal landscape of the U.S. predictive markets but also indicates that the CFTC is seeking to play a more central role in the rapidly evolving digital asset sector.
Rule Withdrawal: From Restriction to a Clear Signal of “Supporting Innovation”
This action by the CFTC has strong symbolic significance and practical impact. The two documents withdrawn were originally representative of the agency's cautious and even restrictive stance on predictive markets (often involving sports, elections, and other event contracts).
2024 Proposal: Aimed at establishing new rules for event contracts, now withdrawn. Selig stated that the new rules would be based on a more rational and coherent interpretation of the Commodity Exchange Act, to "promote responsible innovation in the derivatives market".
2025 Internal Guidance: Previously warned licensees to be prepared for all foreseeable circumstances that might arise from litigation in predictive markets. Selig believes this notice "inadvertently caused confusion and uncertainty among our market participants".
Along with the CFTC's previous abandonment of legal appeals against election betting, these actions clearly outline a policy shift under the new leadership: from restriction to providing a clearer, possibly more friendly regulatory framework for compliant innovation. As PASA's official website points out while tracking global regulatory dynamics, the clarity of regulatory attitudes is crucial for the development of emerging financial technology fields.
Legal Battlefield Escalation: CFTC May Personally “Enter the Field” to Support
The clear shift in regulatory stance directly intensifies the legal battle between predictive market operators and state governments. Among the four agenda items outlined by Selig last week, withdrawing old rules and establishing new ones are just two of them. The other two are more offensive:
Emphasizing cooperation with the SEC (Securities and Exchange Commission).
Reevaluating “the Commission's involvement in pending federal court cases at all levels”. Selig specifically noted that the CFTC has the "expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives".
This statement strongly implies that the CFTC may actively intervene in many cases where state and tribal entities sue predictive market operators, but this time the role will be to support the industry and defend its jurisdiction. Core legal issues in court debates, such as whether the Commodity Exchange Act prohibits sports event contracts, congressional legislative intent, and whether states have the right to prohibit transactions within their territories, are becoming increasingly clear and firm in the CFTC's stance.
Legislative Empowerment: New Bill Could Significantly Expand CFTC's Authority
The CFTC's ambitions may not only be limited to policy shifts but could also be significantly "empowered" through new digital asset legislation currently being advanced by Congress. One of the core financial policies of the Trump administration, a series of digital asset market bills. Among them, the "Digital Commodity Intermediary Act" has been passed by the Senate Committee on Agriculture, Nutrition, and Forestry. If this bill becomes law, it will grant the CFTC a range of new powers, including:
Defining digital commodities anew.
Establishing consumer protection measures including "conflict of interest safeguards".
Setting up a new registration system to promote "onshore, liquid, and resilient regulated markets".
Securing new funding to "establish a spot market regulatory system".
The committee chairman stated that this is a key step in establishing clear rules for the digital asset market. This means that the CFTC may not only be more actively supportive of predictive markets in the future, but its regulatory toolbox and resources are also set to be significantly expanded, becoming a more powerful regulator in the U.S. digital asset ecosystem.
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