Crypto.com, Gemini, Coinbase Join Forces to Oppose CFTC Proposal That Could Ban Prediction Markets

Several industry leaders in crypto and fintech, from Gemini and Crypto.com to Robinhood and influential blogger Scott Alexander, have spoken out against a proposed rule change that could ban political prediction markets in the United States.

Elizabeth Warren and other Democratic lawmakers recently pressured the U.S. Commodity Futures Trading Commission (CFTC) to finalize rules clarifying that prohibited so-called “event contracts” include “staking or risking anything of value on the outcome of any political contest, awards show, or sporting event involving one or more athletes, or the occurrence or non-occurrence of such a contest or event,” thereby prohibiting entities registered with the CFTC from trading such contracts.

“As the 2024 election approaches, voters are already facing a political system in which the wealthiest individuals and corporations can secretly funnel dark money to campaigns,” the lawmakers said in their letter. “The threat of violence and extremism is high, and the United States remains a target for foreign powers seeking to interfere in our elections. The last thing voters need as they head to the polls is to bet on the outcome of that election.”

The proposed rule change has been met with outspoken opposition from stakeholders in the cryptocurrency and fintech industries, which have grown increasingly sympathetic to prediction markets in recent months. Following Coinbase’s comments, Gemini co-founder Cameron Winklevoss added his own opinion to X, writing, “Instead of blocking Americans from accessing this powerful market and moving forward, the CFTC should withdraw this proposed rule and re-engage with industry stakeholders. This would be a confidence-building move.”

Crypto.com SVP Steve Humenik also submitted an opinion arguing that the CFTC should not overstep its authority. “Congress had the ability to draft a much simpler language that stated, ‘The following types of event contracts are prohibited,’ but they did not,” he wrote.

Likewise, Jessica Furr and Brian Edelman, general counsel at cryptocurrency VC Dragonfly Capital, argued in a commentary that the Supreme Court’s overturning of the Chevron doctrine means the CFTC must be allowed to defend its authority to regulate such contracts.

“The CFTC is not a gambling or election regulator and has no authority to regulate these markets. Whether the CFTC has jurisdiction over election campaign contracts is a matter for the courts to decide,” they wrote.

Others who have spoken out against the idea include Robinhood, Astral Codex Ten, Substack influential blogger Scott Alexander, and the founder of popular election odds aggregator ElectionBettingOdds.com.

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