Publicly listed crypto exchange Coinbase has issued a statement to Commodity Futures Trading Commission (CFTC) officials on reconsidering its definition of ‘gaming.’ With that, it seeks to convince the agency to alter its upcoming rules for prediction markets.
The Coinbase statement noted, “We support the Commission’s mission to promote integrity, resilience, and vibrancy of the US derivatives markets through sound regulation. However, we have significant concerns with both the Proposal’s content and the analytical approach it takes to support the proposed amendments.”
The exchange feels the broad definition adopted by the CFTC for gaming contracts unfairly looks at how prediction markets operate and that the agency should look at gaming implementations on a per-contract basis. “The Proposal would effect a ban on certain types of event contracts, on a categorical basis, by adopting a broad and vague definition of “gaming” and determining that “gaming” contracts are contrary to the public interest.”
According to the CFTC, gaming contracts include “staking or risking something of value on the outcome of a political contest, an awards contest, or a game in which one or more athletes compete, or an occurrence or non-occurrence in connection with such a contest or game.” The agency has further mentioned, “Thus, event contracts involving these illustrative examples of gaming could not be listed for trading or accepted for clearing under the proposal.”
Coinbase feels that the CFTC has “failed to recognize the positive impact of prediction markets on the economy.” It iterated in its statement that the regulator’s definition does not distinguish speculation from outright gambling, and its rules, if enforced, will unfairly treat prediction markets like the decentralized Polymarket platform.
The exchange also emphasized the importance of prediction markets in providing forecasts of real-world events, as such platforms allow users to bet on their outcomes. Polymarket lets users speculate on the outcome of geopolitical events like war, elections, and more. Such markets provide well-rounded forecasting and even outperform traditional methods.
Coinbase’s chief legal officer, Paul Grewal, posted on X, asking the CFTC to reconsider, “We urge the CFTC to withdraw this proposal and work alongside academic, industry, and policy stakeholders to develop a more balanced approach that promotes innovation while protecting the public interest.”
