Prediction markets, betting operators join new CFTC advisory committee
The Commodity Futures Trading Commission (CFTC) has named members to its Innovation Advisory Committee, just a month after creating the body to offer guidance on the impact of technology in the commodities and derivatives space.
The committee will offer guidance to the CFTC on artificial intelligence and other technologies such as blockchain.
CFTC Chairman Michael Selig sponsors the committee and named senior advisor Michael Passalacqua as its designated federal officer.
The new organisation includes several executives from sports prediction platforms.
Kalshi CEO Tarek Mansour, Polymarket CEO Shayne Coplan, Coinbase CEO Brian Armstrong, Crypto.com CEO Kris Marszalek, Robinhood CEO Vlad Tenev, Kraken Co-CEO Arjun Sethi, and Gemini CEO Tyler Winklevoss are among those selected.
These individuals represent the primary operators currently active in the prediction markets and event contracts sector.
In addition, Christian Genetski, president of FanDuel, and Jason Robins, CEO of DraftKings, are on the list.
Although their focus has long been on the traditional sports betting and fantasy sports sectors, both recently entered the event-based prediction market space.
Leading executives of several other companies represented in the group are also involved in the emerging prediction markets sector, either as digital asset exchanges, clearing houses, or broader market infrastructure firms that support these markets.
Among these are Hayden Adams, CEO of Uniswap Labs; Tom Farley, CEO of Bullish; Brad Garlinghouse, CEO of Ripple and Nathan McCauley, CEO of Anchorage Digital.
Also in this group are Peter Mintzberg, CEO of Grayscale; Sergey Nazarov, CEO of Chainlink Labs; and Luke Hoersten, CEO of Bitnomial.
These firms provide underlying technology, such as data oracles, blockchain hosting, and institutional clearing, to the sector.
Global exchanges, clearing houses to help guide policy
The committee includes several heads of major global exchanges, as well. Leaders from CME Group, Cboe Global Markets, Nasdaq, Intercontinental Exchange, and LSEG were also selected to join the group.
These executives represent the primary venues where global derivatives, equities, and commodities are traded and priced.
In addition, the group includes leaders of essential market infrastructure and industry associations, including Options Clearing Corporation, Depository Trust and Clearing Corporation, DRW, FIA and ISDA.
These individuals oversee the clearing, risk management, and regulatory advocacy frameworks that ensure the stability and standardised operation of the global financial system.
Professors Harry Crane and Carla Reyes also serve as representatives, alongside Chris Dixon, managing partner of a16z crypto, Alana Palmedo, managing partner of Paradigm, Vivek Raman, CEO of Etherealize, and Thomas Chippas, CEO of Rothera Markets.
Selig: Prediction markets “are not wagers”
Selig said the agency plans to replace years of ad hoc oversight of prediction markets with formal rulemaking, asserting that such products fall within the regulator’s remit as financial instruments rather than betting.
In a recent interview on the Bloomberg podcast Odd Lots, Selig reiterated that the CFTC considers event contracts and similar products to be financial instruments.
He said: “This is financial market activity. These are not wagers. You’re not betting against the house. We have significant overlay from a regulatory standpoint over these markets.”
He added that if products are structured as swaps, the agency has authority and expects them to carry investor protections comparable to securities and futures markets.
Selig rejected the idea of applying different standards to contracts tied to elections or sports.
He asserted: “We’re not gatekeeping particular categories of markets, elections or sports and having different standards.”
Specifically on the question of sports markets and potential match-fixing, Selig stated that the CFTC is in talks with representatives of the various sports leagues.
Although he did not specify what the end result of those talks will be, the discussion around the statement suggests the regulator is working with leagues to formulate rules on sports prediction markets, to mitigate potential match-fixing.
Regulation by enforcement, not litigation
He also stated that “regulation by enforcement” is the guiding model, signalling a shift from litigation-driven oversight.
Instead, the agency intends to pursue notice and comment rulemaking.
Selig said that the CFTC needs “clear rules of the road”, adding: “We need to do things through notice and comment rulemaking, and actually think holistically about our markets and not focus on these little patchwork no action letters.”
He described past reliance on no action letters as an ad hoc approach that created uneven standards.
Selig added the CFTC has further rulemaking and policy work ahead to establish a coherent market structure for this asset class and for blockchain-based markets.
He linked the effort to gaps that followed the Dodd-Frank reforms, which he said were never fully addressed.
The chairman added that the commission wants market participants involved in shaping rules, including standards for marketing. The agency will seek public input through its notice and comment process before setting those standards.
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