Background and Decision
Chairman Mike Selig of the U.S. Commodity Futures Trading Commission (CFTC) recently announced the official withdrawal of the controversial 'event contract' rule proposal introduced in 2024. The proposal aimed to restrict prediction market contracts based on political events, but was criticized as a hasty decision made by the previous administration ahead of the election, lacking a deep understanding of market dynamics.
New Regulatory Direction
Selig stated that the CFTC will develop new rules based on a rational interpretation of the Commodity Exchange Act, aiming to promote responsible innovation. He emphasized that the previous proposal reflected inappropriate 'value-based regulation' and failed to balance market risks with innovation needs. Additionally, the Commission has also withdrawn an industry advisory issued in September last year, which had created confusion among market participants.
Market Response and Future Outlook
This decision has been widely welcomed by the industry, with several institutions, including Coinbase and Cboe, expressing strong interest in entering the prediction market space. As Congress advances the crypto market structure bill, the CFTC is expected to take on a larger regulatory role, especially in the area of non-security crypto spot markets.
- Revocation of event contract proposal
- Regulatory direction becomes clearer
- Attracting institutional participation
- Potential regulatory expansion ahead