CFTC’s New Sheriff Wants to ‘Future-Proof’ Prediction Market Regulations
Commodity Futures Trading Commission Chairman Michael S. Selig desires to run the fee with “minimal” regulation on prediction markets. But getting it won’t be that simple.
Selig laid out the way forward for the company in an op-ed for the Washington Post on Jan. 20. With bombastic, expansionist language that linked blockchain and prediction markets to homesteaders and Wild West pioneers, Selig stated that “the identical spirit that drove American farmers to domesticate the Great Plains conjures up right now’s entrepreneurs to go away conventional finance behind.”
In what Selig calls his “Future-Proof initiative,” he indicated how the Commission will deal with prediction markets like Kalshi and Polymarket:
“As new asset lessons emerge and the CFTC’s function evolves, tips we set up shouldn’t simply match the product, but additionally serve a tailor-made regulatory function. Prediction markets have exploded in reputation as broad swaths of market contributors search to hedge portfolio dangers and take a look at their skills to forecast reality.”
Prediction market free-for-all?
Selig—whom President Donald Trump nominated in October 2025 and was confirmed to the function two months later—desires the CFTC to alter course, turning away from the way it acted beneath President Joe Biden. Selig accused Biden’s CFTC of specializing in “regulation by enforcement,” of getting an “aversion to innovation” that drove many prediction markets offshore.
CFTC’s strategy must be “to ship the minimal efficient dose of regulation — nothing extra and nothing much less,” in accordance to Selig. This, he stated, meant the “finish to policymaking by enforcement.”
Instead, the CFTC will develop “clear guidelines of the highway for market contributors that will probably be codified by notice-and-comment rulemaking to make sure that the regulatory necessities don’t change wildly from administration to administration.”
Can a sheriff be the mayor?
Selig’s op-ed wasn’t that revolutionary. After all, he clerked beneath CFTC Commissioner J. Christopher Giancarlo, aka “Crypto Dad.” And like his mentor, Selig could be very crypto-focused.
Selig wasn’t going to are available in and begin regulating prediction markets. If something, he’d focus his sources on making America the “crypto capital of the world.” Leaving the CFTC’s prediction market regulation on the naked “minimal” simply appears…anticipated?
But that doesn’t imply it’s now the Wild West. Goodwin legal professional Andrew Kim, who has been following the adjustments to the CFTC, weighed in on Selig’s proposed strategy to altering the foundations.
“Notice-and-comment rulemaking—even to repeal present guidelines to decrease the ‘dose of regulation’ to the ‘minimal efficient’ degree—takes a variety of time. And I’ve to think about that such rulemaking will probably be contentious, not less than as to prediction markets,” Kim wrote on X.
Notice-and-Comment Rulemaking is a multi-step course of for companies to create guidelines. First, the company points discover of a proposed rulemaking change; they supply alternatives for public remark for 30-60 days; the company considers feedback and develops the ultimate rule; after which it publishes the ultimate rule.
Kim advised that there could possibly be “a scarcity of consensus on what the foundations of the highway must be” and that tribal gaming organizations could have loads to say about loosening restrictions on prediction markets.
“Litigation might inevitably drag out the method,” stated Kim. “At the top of the day, there’s solely a lot an company can do to ‘future-proof’ its coverage prerogatives. And ‘future proofing’ requires going by the tedium of the [Administration Procedure Act], and weathering litigation.”
Selig serving solo?
If the CFTC can’t simply change the foundations, can it resolve to merely not implement them?
Normally, the CFTC consists of 5 commissioners appointed by the President of the United States. These members serve staggered five-year phrases and not more than three commissioners at one time could also be from the identical political occasion (which means, there ought to at all times be 3 Republicans/2 Democrats or vice-versa).
There usually is a transition initially of latest presidential administrations, with members vacating their seats. In 2024, each Commissioner Christy Goldsmith Romero and Commissioner Summer Mersinger resigned. Commissioner Kristin Johnson left her put up the next September, leaving Caroline D. Pham as the only real member and Acting Chairman till Selig’s affirmation in December. Afterward, she resigned to enter the personal sector.
All 4 girls had been nominated to the CFTC by President Joe Biden, and have but to get replaced by President Trump. And Trump doesn’t appear to be in a rush to identify their replacements.
Thus, there’s actually no opposition to Selig’s designs for the CFTC. And he might stay the only real voice within the room for some time: Section 2(a)(3) of the Commodity Exchange Act permits the CFTC to perform with just one Commissioner (“a emptiness within the Commission shall not impair the appropriate of the remaining Commissioners to train all of the powers of the Commission”).
And so, the CFTC’s regulatory energy is at the moment consolidated to one particular person: Michael Selig.
Selig’s acknowledgment of prediction markets marks a change from earlier CFTC iterations, however it appears unlikely that the CFTC will abandon its laissez-faire strategy to this business. Any regulation will possible occur on the state degree—or within the courts. Then, the CFTC will probably be pressured to weigh in, a headache that Selig gained’t have the ability to “future-proof” himself from.
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