Two main U.S.-based crypto exchanges, Gemini and Coinbase, have challenged the US Commodities Futures Buying and selling Fee’s (CFTC) proposed rule to restrict prediction markets like Polymarkets.
The CFTC’s proposal, unveiled in Could, seeks to limit sure occasion contracts, particularly these associated to political occasions. This transfer has garnered backing from US lawmakers similar to Senator Elizabeth Warren, who has voiced considerations in regards to the dangers related to election-related playing.
Gemini, Coinbase Urges CFTC to Withdraw Proposal
In an August 8 letter, Gemini argued that the proposed rule conflicts with the Commodity Trade Act (CEA), as supposed by Congress. The trade claims the rule may undermine public curiosity and misread the CEA’s targets.
Gemini contends that the proposal misinterprets the CEA by broadly categorizing all occasion contracts, probably negating Congress’s intent for the CFTC to evaluate particular person contract certifications. The trade additionally criticized the proposal for missing concrete proof of hurt from prediction markets, calling it a “solution in search of a problem.”
“The Notice of Proposed Rulemaking, 89 FR 48968, (Notice) does not provide any reasonable basis for concluding that prediction markets relating to elections or other unknown events are in any way a problem, or that anyone has been harmed by the existence of such markets,” the letter said.
Learn extra: How Can Blockchain Be Used for Voting in 2024?
Cameron Winklevoss, co-founder of Gemini, emphasised that decentralized prediction markets are an vital innovation with real public utility. These markets supply precious insights into future occasions backed by monetary accountability. Not like polls or skilled opinions, members in prediction markets have a monetary stake, including integrity to the data.
“There is nothing thoughtful about a blanket ban on markets that have been employed for decades in one form or another and have proven extremely reliable tools for forecasting future events. More recently, the growth of these markets built on top of crypto protocols promises greater access, liquidity, and aggregation of the wisdom of the crowd for all,” Winklevoss added.
Gemini concluded that the rule may face intensive authorized challenges if enacted by the Fee.
Notably, Coinbase echoed Gemini’s name for the CFTC to withdraw the proposal in its personal letter. Paul Grewal, Coinbase’s Chief Authorized Officer, criticized the proposal for its obscure definition of “gaming.” Moreover, he disputed the CFTC’s declare that such markets are towards public curiosity.
“We urge the CFTC to withdraw this proposal and work alongside academic, industry, and policy stakeholders to develop a more balanced approach that promotes innovation while protecting the public interest,” Grewal remarked.
Learn extra: Crypto Regulation: What Are the Advantages and Drawbacks?
Previously yr, prediction platforms have surged in reputation, particularly for betting on occasions just like the 2024 US presidential election. For context, Polymarket has skilled a big surge in exercise. The decentralized platform noticed over $387 million in quantity final month, in keeping with a Dune Analytics dashboard.
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