Crypto and fintech companies, including Crypto.com, Gemini, and Coinbase, are standing united against a proposed rule by the U.S. Commodity Futures Trading Commission, the CFTC that could outlaw political prediction markets.
CFTC’s proposed rule led to controversy
The CFTC is facing strong opposition from major players in the crypto and fintech sectors.
A new proposal, driven by pressure from Senator Elizabeth Warren and other prominent Democrats, wants to clarify that event contracts involving wagers on political outcomes, award shows, or sports events would be banned.
This would be the best move in a free market economy, oh wait…
The lawmakers behind the proposal argue that, as the 2024 election approaches, the political climate is already fraught with challenges such as dark money in campaigns and the ongoing threat of foreign interference.
They believe that adding a layer of financial betting on election outcomes could magnify these issues, potentially undermining public trust in the electoral process.
No one added anything about how they want to solve the political climate being trashy.
Crypto and fintech industry pushback
The proposed rule has not gone unnoticed by industry players. Leaders from the crypto and fintech worlds have voiced strong objections, arguing that the rule is overly restrictive and could stop innovation in prediction markets, which have gained traction in these sectors.
Cameron Winklevoss, co-founder of Gemini, took to social media to express his concerns, urging the CFTC to reconsider its approach.
Decentralized prediction markets are a significant innovation with real public utility. They provide valuable information on future events that is rooted in financial accountability. Unlike polls, pundits, or expert opinions, they require participants to put their money where… pic.twitter.com/Il9tiEyQqW
— Cameron Winklevoss (@cameron) August 10, 2024
He suggested that rather than pushing forward with the rule, the CFTC should engage with industry participants to find a more balanced solution.
According to Winklevoss, this would help build trust between regulators and the industry.
Steve Humenik, Senior Vice President at Crypto.com, also shared opinions, cautioning the CFTC against overstepping its regulatory authority.
Humenik pointed out that Congress could have clearly prohibited specific types of event contracts but chose not to. This means that the CFTC’s proposal may be pretty much an overreach.
Much wider consequences
The opposition to the CFTC’s proposal extends beyond just these companies. Robinhood and Scott Alexander, a well-known blogger from the Astral Codex Ten Substack, have also joined the vioces of dissent next to the founder of ElectionBettingOdds.com, an aggregator site.
