CFTC Calls For Clear Laws on Crypto and Predictive Election Bets
The chair of the Commodity Futures Trading Commission, Rostin Behnam, recently highlighted the issue of Congress’s inaction around cryptocurrency regulations and predictive election betting. At the SIFMA meeting, Behnam discussed the need for setting up specific legal regulations for these developing industries.
CFTC Presses For Action on Crypto Regulations and Election Betting Laws
At the SIFMA annual meeting, CFTC Chair Behnam continued to stress his prior appeal to Congress to provide directives on it’s stance on cryptos regulation. Nevertheless, he criticized the existing legal environment mentioning the signs of fast movement and the growing popularity of digital assets. According to him, the framework does not have adequate coherence to effectively regulate cryptocurrency markets.
In addition, Behnam pointed out that there were gaps in the system due to the absence of proper crypto regulation. He noted the issue with the regulation of spot markets and with the potential effects of blockchain and tokenization technology in financial markets. He stated,
“Digital assets come top of mind when it comes to regulating spot markets, but the broader question is, what is blockchain and tokenization going to do for financial markets?”
Behnam urged Congress to provide more explicit guidance on these issues.
Despite the pressing need for clearer laws, CFTC Chair expressed skepticism about the possibility of any meaningful legislative action on crypto regulations this year. Given the short legislative calendar and the focus on other urgent matters like passing a federal budget. He suggested that significant progress might have to wait until after the 2024 elections.
The Debate Over Predictive Election Betting
In addition, Behnam also called for legislative clarity on predictive election betting. The CFTC has found itself at the center of this issue, particularly regarding prediction markets that allow users to bet on the outcomes of events, including elections. Behnam noted that while these markets provide valuable forecasting tools for various sectors, they raise legal and ethical concerns when it comes to elections.
The CFTC has consistently maintained that contracts betting on election outcomes are unlawful. Behnam expressed frustration over the agency being placed in the role of an “election cop.” He suggested that the regulation of such markets should fall under more explicit legal guidelines set by Congress. He stated,
“This is a classic area where Congress should weigh in.”
Additionally, the debate over election betting has recently come to a head in a legal battle between the CFTC and Kalshi, a predictions market platform. Last year, the commission blocked Kalshi from offering election contracts, arguing that such offerings were against the public interest. Kalshi responded by suing the commission, leading to a legal dispute that remains unresolved.
In September 2023, a federal court ruled that the commission had overstepped its statutory authority in attempting to block Kalshi’s election contracts. Despite this ruling, the CFTC has continued to fight the decision, filing an appeal last month.
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