CFTC Signals New Rulemaking for Prediction Markets and Crypto Oversight
From the desk of Jim Eccleston at Eccleston Law
The Commodity Futures Trading Commission (CFTC) plans to develop new regulations governing the growing prediction markets industry, Chairman Michael Selig announced, signaling a shift in regulatory strategy. According to Bloomberg, the announcement also included plans to coordinate with the Securities and Exchange Commission on digital asset rulemaking as lawmakers continue drafting crypto legislation.
Chairman Selig stated that the agency intends to establish clearer regulatory standards for event contract markets. In prepared remarks, he emphasized the CFTC’s support for lawful innovation while promoting responsible development within crypto asset and prediction markets.
Prediction market platforms such as Kalshi Inc. and the U.S. arm of Polymarket operate exchanges regulated by the CFTC that allow customers to trade contracts tied to the outcomes of future events, including elections and sporting events.
Trading activity on these platforms has increased significantly despite opposition from certain state gaming regulators. Bloomberg reported that sports-related trading constitutes a substantial portion of the volume on some exchanges, including Kalshi.
The CFTC also announced that it will withdraw a 2024 regulatory proposal that sought to prohibit sports and political wagering through prediction markets. The agency will also rescind a 2025 staff advisory that cautioned companies against offering sports-related contracts while litigation remained ongoing. Chairman Selig stated that the advisory created market uncertainty, despite its intended purpose of highlighting litigation risks. He also reiterated the agency’s position that the CFTC maintains exclusive jurisdiction over commodity derivatives.
The announcement comes amid growing public and industry interest in prediction markets. Bloomberg reported that entities affiliated with the family of President Donald Trump have entered the sector. Donald Trump Jr. has taken advisory roles with both Kalshi and Polymarket, and Trump Media & Technology Group Corp. has announced plans to launch its own marketplace. Representatives for those organizations did not immediately respond to requests for comment.
Chairman Selig also addressed digital asset regulation during a panel discussion alongside Securities and Exchange Commission Chairman Paul Atkins. Both regulators pledged to coordinate rulemaking efforts as Congress continues to evaluate legislation that would divide oversight authority between the two agencies.
Bloomberg reported that the Senate Agriculture Committee recently advanced legislation that would grant the CFTC primary authority over spot commodity markets involving digital assets such as Bitcoin. However, a companion bill in the Senate Banking Committee has stalled due to disagreements regarding whether crypto exchanges should offer incentives tied to customer token holdings.
Chairman Selig stated that regulatory rulemaking alone will not fully resolve oversight challenges and noted that congressional action remains necessary to establish a comprehensive framework. He also referenced concerns about long-term regulatory consistency, noting the importance of creating durable regulatory structures for the digital asset industry.
The CFTC’s planned withdrawal of prior proposals and its commitment to new rulemaking signal a significant shift in the agency’s regulatory posture toward both prediction markets and cryptocurrency oversight, according to Bloomberg.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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