Crypto exchange Gemini wants the Commodity Futures Trading Commission to not proceed with its proposed rules for event contracts offered via decentralized prediction markets. The agency seeks to ban such offerings, preventing users from betting on election results, war outcomes, and other happenings.
In a letter addressed to the CFTC, Gemini said, “There are numerous problems with the Proposal, but we focus on the aspect of the Proposal that would define ipso facto all event contracts involving “gaming” as contrary to the public interest. In particular, we highlight the adverse impact that this rule would have on prediction markets, including prediction markets used to forecast elections.”
The issue many participants in the crypto market find with the CFTC’s decision is its broad definition of “gaming” that unfairly categorizes event contracts. Moreover, the regulator has mentioned that gaming offerings are “contrary to public interest.”
Gemini cited the Commodity Exchange Act (CEA), mentioning, “There is nothing in the statute, including in the Dodd-Frank provisions relating to event contracts, stating that all event contracts in the Enumerated Activities are, by definition, contrary to the public interest.”
Furthermore, the exchange explained how event contracts innovate to provide real-world benefits. “Such markets have been employed for decades and have proven extremely reliable tools for forecasting future events. This is true for contested events like elections, but also for matters like the spread of infectious diseases, patterns of migration, and weather, among many others.” The letter expanded, “Put simply, people put more effort into making accurate predictions when they have something to gain by doing so.”
Cameron Winklevoss, Gemini’s cofounder, showed his support for prediction markets on X, “Unlike polls, pundits, or expert opinions, they require participants to put their money where their mouth is — to have skin in the game. This proof of stake requirement gives them an integrity that other information sources cannot claim.”
Coinbase, too, sent a letter to the CFTC on the same day, highlighting the issues with the agency’s stance on gaming and event contracts.
