Coinbase has urged the US Commodities Futures Buying and selling Fee (CFTC) to withdraw a proposal that might have an effect on prediction markets like Polymarket, in keeping with an Aug. 8 letter.
Paul Grewal, Coinbase’s Chief Authorized Officer, criticized the proposal for its broad and unclear definition of “gaming” and its assertion that “gaming” contracts are in opposition to the general public curiosity.
Coinbase contends that the proposal exceeds the Fee’s statutory authority and deviates from the usual observe of evaluating contracts individually.
The agency additionally argued that the proposal was economically unsound. Grewal identified that the CFTC’s proposal fails to acknowledge the optimistic financial influence of prediction markets and lacks proof to substantiate claims that these markets may hurt traders.
The letter said:
“The Proposal questions their scientific advantage and highlights their potential to hurt traders, however with out citing proof to help these conclusions.
Consequently, Coinbase known as on the CFTC to both withdraw or revise the proposal to help accountable innovation somewhat than broadly categorizing all occasion contracts as gaming.
Coinbase asserted:
“We firmly imagine that this all-or-nothing strategy to the therapy of occasion contracts is just not in step with the promotion of accountable innovation and development in regulated, clear markets with applicable safeguards to guard market integrity and shield prospects.”
Coinbase’s transfer gained vital help from the crypto group, with CoinFund President Chris Perkins urging the CFTC to “cease suppressing innovation and fact.” He added that these platforms are usually not in opposition to the general public curiosity, noting that they supply important datasets that profit the general public.
Prediction markets’ reputation soar
In the meantime, the crypto group’s protection of prediction markets comes as these platforms have gained vital reputation in the course of the previous yr, notably in betting on occasions just like the 2024 US presidential election.
Platforms equivalent to Polymarket have seen substantial exercise, with over $1 billion in complete betting quantity and over $550 million in bets on the result of the US election alone.
In response to this surge, the CFTC proposed in Could to limit particular occasion contracts, particularly these associated to political occasions, citing issues over market integrity and public curiosity.
Notably, some lawmakers led by Senator Elizabeth Warren lately supported the regulator’s transfer whereas criticizing the “commodification” of US elections.