- The CFTC will file a legal brief supporting crypto.com against state litigation, marking a major escalation in federal oversight of prediction markets.
- Chair Michael Selig argues event contracts on platforms like Polymarket and Kalshi are legally “swaps” and not gambling, contradicting nearly 50 state-level cases.
- The agency asserts its exclusive jurisdiction and will actively defend federally registered exchanges, including Coinbase, from state overreach.
- This action occurs as legislative progress on crypto regulation, like the CLARITY Act, has stalled in Congress.
The Commodity Futures Trading Commission (CFTC) announced on Tuesday it will intervene in a critical legal battle, filing a “friend-of-the-court” brief in the Ninth U.S. Circuit Court of Appeals to support Crypto.com. This aggressive move was detailed in an opinion piece by Chairman Michael Selig, who declared the agency will no longer tolerate state challenges to its authority. Consequently, the CFTC is positioning itself as the primary defender of prediction markets against what it views as erroneous state interference.
Selig stated that event contracts serve legitimate economic purposes, like allowing farmers to hedge weather risks. He firmly contends these products qualify as “swaps” under federal law and are therefore under CFTC oversight. However, state regulators across nearly 50 cases allege these contracts constitute illegal gambling instead. The agency now plans to defend all federally registered exchanges, including Polymarket, Kalshi, and Coinbase, from such litigation.
Meanwhile, this regulatory clash unfolds against a backdrop of stalled crypto legislation in Washington. The Senate Agriculture Committee advanced its portion of the Digital Asset Market Clarity Act in January, but progress has halted. The CFTC’s stance reinforces its view of exchanges as regulated entities, not a “Wild West.” This intervention follows the agency’s recent expansion of its Innovation Advisory Committee, which added Coinbase CEO Brian Armstrong as a member.
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