Crypto Giants Blast- Dragonfly and Crypto.com Slam CFTC’s Prediction Market Regulations as Overreaching
Crypto Giants Blast– Dragonfly Digital Management and Crypto.com have joined forces with crypto exchange Coinbase in a strong critique of the Commodities Futures Trading Commission’s (CFTC) proposed rules targeting prediction markets.
The CFTC’s new regulations are facing backlash for their broad scope, which critics argue unfairly categorizes and bans certain event contracts, including those related to gaming and elections. Coinbase has specifically called out the CFTC’s definition of gaming as too vague, while Dragonfly’s Jessica Furr and Bryan Edelman emphasized that political event contracts should not be lumped together with chance-based gambling like the Super Bowl. They argue that elections have profound economic implications and that these contracts serve vital risk-hedging functions aligned with the Commodity Exchange Act (CEA).
Dragonfly also asserts that the CFTC’s proposed rules overreach by banning prediction markets without thorough evaluation. This criticism is underscored by the recent Supreme Court ‘Chevron’ decision, which constrains the agency’s interpretive authority without clear Congressional backing.
Steve Humenik, Special Vice President of Capital Markets at Crypto.com, argues that the CFTC’s approach to banning prediction markets disregards the CEA’s mandated three-step rulemaking process. According to this process, the CFTC must evaluate whether a contract involves an excluded commodity, if it engages in specified activities, and if it aligns with public interest before implementing a ban.
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