A number of industry leaders across crypto and fintech, from Gemini and Crypto.com to Robinhood and influential blogger Scott Alexander, have declared their opposition to a proposed rule change that could see political prediction markets banned in the United States.
Elizabeth Warren and other Democrats have recently pushed the U.S. Commodity Futures Trading Commission (CFTC) to finalize a rule clarifying that prohibited so-called “event contracts” include “staking or risking something of value on the outcome of a political contest, an awards contest, or a game in which one or more athletes compete, or an occurrence or non-occurrence in connection with such a contest or game,” thereby banning such contracts from trading by CFTC-registered entities.
“As we approach the 2024 election, voters already face a political system that allows the richest individuals and corporations to funnel dark money into campaigns without disclosure,” the lawmakers said in the letter. “The threat of violence and extremism is high, and the U.S. remains a target for foreign actors who have sought to meddle in our elections. The last thing that voters heading to the polls need are bets waged on the outcome of that election.”
The proposed rule change has been met with outspoken opposition from stakeholders in the crypto and fintech industries, which have increasingly warmed to prediction markets in recent months. Following Coinbase’s comment, Gemini co-founder Cameron Winklevoss added his voice on X, writing, “Rather than forging ahead and denying Americans access to these powerful markets, the CFTC should withdraw this Proposed Rule and go back to the drawing board with industry stakeholders. This would be the trust-building move.”
Crypto.com SVP Steve Humenik also submitted a comment, arguing that the CFTC should not overreach its authority. “Congress had the ability to draft much more simply ‘the following types of event contracts are prohibited,’ but it did not,” his letter states.
Similarly, crypto VC Dragonfly Capital’s associate general counsels Jessica Furr and Bryan Edelman argued in their comment that the overturning of the Chevron doctrine by the Supreme Court means the CFTC must ensure it can defend its authority to regulate these contracts.
“The CFTC is neither a gambling nor an election regulator and is not equipped to regulate this market; whether the CFTC has jurisdiction over election events contracts requires a court’s determination,” they wrote.
Other voices echoing opposition included Robinhood, influential blogger Scott Alexander of the Astral Codex Ten Substack, and the founder of popular election odds aggregator ElectionBettingOdds.com.
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