CFTC Prediction Market Proposal Now Receiving Fierce Opposition From the Crypto Industry
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Key Points: The CFTC prediction market proposal is receiving strong opposition from major crypto and fintech firms. Critics argue the rule’s broad definition of “gaming” improperly restricts event contracts and conflates speculation with gambling. A proposed rule change by the U.S. Commodity Futures Trading Commission threatens to upend nascent political prediction markets such as Polymarket and has engendered fierce pushback from some of the biggest names in cryptocurrency and financial technology. Read more: CFTC Investigates Ben Armstrong Former Company Over Alleged Meme Coin Scam CFTC Rule Change Draws Backlash From Crypto, Fintech CEOs The CFTC prediction market proposal has received criticism from industry leaders such as Gemini, Crypto.com, Robinhood, and Coinbase, and prominent individuals like blogger Scott Alexander. Their argument was that the CFTC’s plan overstepped its regulatory mandate because it is neither a gambling authority nor an election regulator. The CFTC was not qualified to police such markets, said Steve Humenik, senior vice president at Crypto.com. In an extensive letter, Coinbase expressed its concern that the unduly broad CFTC definition of “gaming” inappropriately restricted event contracts without first examining their public interest. The exchange is arguing that the rule would classify something under the CFTC as gaming that is a legitimate contract—for instance, those used to hedge costs in sports events—which they claim doesn’t square up to legislative definitions of gambling. Coinbase has since trashed the CFTC prediction market proposal due to a perceived confusion between speculation and gambling while failing to draw a line between pure gambling and market speculation. As per the exchange, the definition of the new rule misclassifies processes such as elections or awards. Industry Leaders Demand Revision in CFTC Prediction Market Proposal The backlash resonates across the broader crypto and fintech community, as Gemini co-founder Cameron Winklevoss implores the CFTC to rescind the proposal…
Filed under: News - @ August 11, 2024 4:04 am