Breaking: U.S. CFTC Moves To Defend Polymarket, Kalshi From Regulatory Crackdown By State Regulators

The U.S. Commodity Futures Trading Commission (CFTC) Chair Mike Selig announced that the CFTC has filed an amicus curiae brief to defend its jurisdiction over prediction markets such as Polymarket and Kalshi. This follows the regulatory crackdown from state regulators, who alleged that these platforms are operating as unlicensed sports betting platforms.

CFTC Contests State Regulators’ Efforts To Crack Down On Prediction Markets

In an X post, Selig stated that they have filed a ‘friend of the court’ brief to defend their jurisdiction over Polymarket, Kalshi, and other prediction markets. This came as he noted that over the last year, American prediction markets have faced an “onslaught” of state-led litigation, prompting the Commission to file this motion.

The CFTC chair further stated that prediction markets aren’t new and that the Commission has regulated them for over two decades. He added that these markets provide a “useful function” for society by enabling Americans to hedge against commercial risks and that they also serve as an important check on our news media and information streams.

CoinGape reported earlier that prediction markets such as Polymarket and Kalshi were facing a regulatory crackdown from state authorities over their sports prediction offerings. Prior to this move by the Commission, Polymarket had already sued Massachusetts, arguing that it falls under the CFTC’s jurisdiction rather than state regulators.

It is worth noting that prediction markets operate as derivatives markets, which is why they fall under the Commission’s jurisdiction. However, states like Massachusetts argue that the sports markets mean that these platforms are operating unlicensed sports betting platforms.

These state regulators have also moved to crack down on top crypto exchanges Coinbase and Crypto.com, which also offer prediction markets. Coinbase CEO Brian Armstrong warned that such a move from these state regulators would hinder innovation in the U.S.

As a ‘friend of the court,’ the CFTC would be able to provide useful information and legal arguments that can influence the court’s decision. A potential decision in this case could be significant, as it could impact the massive traction that these markets are currently recording.

“Comprehensive Authority” From Congress

Selig also noted that Congress has given the CFTC comprehensive authority over any contract based on a commodity, and that the legal definition of a commodity is very broad. He added that thanks to Trump, the Commission has reversed its course on crypto in a way that will ensure that the U.S. remains the crypto capital of the world.

The CFTC is set to gain greater jurisdiction over the crypto industry, alongside the SEC, under the CLARITY Act. Specifically, the Commission will regulate crypto-asset commodities, while the SEC will focus on digital assets that are securities.

Meanwhile, Gemini’s co-founder, Tyler Winklevoss, described the amicus curiae filing by the CFTC as “huge.” He added that this is the kind of leadership and courage that will make America the crypto and markets capital of the world.

Senator Bernie Moreno echoed a similar sentiment, stating that “clear lines of and clarity on regulations” are essential for American-led innovation. He further remarked that Congress has given the CFTC the authority it needs and applauded Selig for his leadership in bringing about much-needed certainty to our innovators.