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 towards the general public curiosity.
Coinbase contends that the proposal exceeds the Fee’s statutory authority and deviates from the usual follow 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 affect of prediction markets and lacks proof to substantiate claims that these markets might 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 referred to as on the CFTC to both withdraw or revise the proposal to help accountable innovation quite than broadly categorizing all occasion contracts as gaming.
Coinbase asserted:
“We firmly consider that this all-or-nothing method to the remedy of occasion contracts just isn’t in step with the promotion of accountable innovation and progress in regulated, clear markets with acceptable safeguards to guard market integrity and defend prospects.”
Coinbase’s transfer gained vital help from the crypto neighborhood, with CoinFund President Chris Perkins urging the CFTC to “cease suppressing innovation and reality.” He added that these platforms should not towards the general public curiosity, noting that they supply important datasets that profit the general public.
Prediction markets’ reputation soar
In the meantime, the crypto neighborhood’s protection of prediction markets comes as these platforms have gained vital reputation throughout the previous 12 months, significantly in betting on occasions just like the 2024 US presidential election.
Platforms akin 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 Might 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.