U.S. CFTC Withdraws Draft Ban on Political Event Contracts, Signaling Shift in Prediction Market Regulatory Stance

Odaily News: U.S. Commodity Futures Trading Commission (CFTC) Chairman Mike Selig announced on Wednesday the formal withdrawal of the "event contract" regulatory draft proposed in 2024, along with the repeal of a related guidance issued during the Biden administration. The draft originally aimed to prohibit prediction contracts based on political event outcomes, equating them with contracts related to wars, terrorism, and other matters deemed "contrary to the public interest."

Selig stated that the 2024 proposal reflected the previous administration's "overreach in conducting value-judgment-based regulation." The CFTC will now advance a new set of rules based on the Commodity Exchange Act (CEA) that are more consistent and rational, aiming to support responsible innovation in the derivatives market and align with the original legislative intent of Congress.

This policy adjustment sends a clearer regulatory signal for prediction markets. Previously, the CFTC lost a lawsuit against Kalshi, forcing it to allow political prediction contracts to be listed. With the new administration taking office, institutions including Coinbase and Cboe have also begun actively expanding into prediction market-related businesses. The withdrawal of the old rules is seen as a significant turning point in the regulatory direction for U.S. prediction markets. (CoinDesk)