U.S.CFTC issues interim rule and proposes bringing prediction-market event contracts under swap regulation

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U.S.CFTC Plans to bring prediction-market event contracts under swap regulation, contesting federal regulatory authority

BlockBeats news,October 10, the U.S. Commodity Futures Trading Commission (CFTC) on Friday issued an interim final rule and proposed another new rule, seeking to further establish its regulatory authority over prediction markets. Under the new proposal, event contracts covering sports, politics, culture, weather and other events traded on platforms such as Kalshi and Polymarket would be brought under the existing U.S. swap regulatory framework, regulated by CFTC; casino-style gambling is excluded from the definition of swaps.

The two rules differ in legal effect and stage of advancement: the interim final rule has taken effect immediately but remains open for public comment; the other rule, which would expressly include event contracts in the definition of swaps, remains at the proposal stage, with a public-comment period of 30 days.

The move comes as CFTC and multiple states are engaged in a legal dispute over regulatory authority for prediction markets. The relevant state governments argue that some sports event contracts are in substance gambling activities and should be subject to state-level gambling regulations;CFTC Chairman Mike Selig, meanwhile, argues that such contracts are financial derivatives under the jurisdiction of a federal agency. The dispute has been submitted to the U.S. Supreme Court, while recent relevant rulings by federal appeals courts have also been divided. The new rules could become an important basis for CFTC to support its regulatory position in subsequent litigation.

Original link https://m.theblockbeats.info/flash/371086

Key points

The U.S. Commodity Futures Trading Commission (CFTC) issued an interim final rule and proposed another new rule on Friday.
The interim final rule has taken effect immediately but remains open for public comment.
The other rule, which would expressly include event contracts in the definition of swaps, remains at the proposal stage, with a public-comment period of 30 days.
The proposal covers event contracts involving sports, politics, culture and weather; casino-style gambling is excluded from the definition of swaps.
State governments argue that some sports event contracts are in substance gambling activities and should be subject to state-level gambling regulations.
CFTC Chairman Mike Selig argues that such contracts are financial derivatives under the jurisdiction of a federal agency.
The relevant dispute has been submitted to the U.S. Supreme Court, and recent relevant rulings by federal appeals courts have been divided.

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

Prediction markets allow users to trade contracts based on events such as sports and politics.CFTC The CFTC seeks to regulate these contracts under financial-derivatives rules, but some state governments consider certain contracts to be gambling, so the parties are contesting regulatory authority.

Why it matters to readers

If the rules ultimately advance, some event contracts on platforms such as Kalshi and Polymarket could become subject to federal swap regulation; however, the scope of the rules and their final legal effect may still be affected by public comments and litigation.

This illustrates that when prediction markets have both trading and gambling characteristics, federal financial regulation and state-level gambling regulation may come into conflict.

Risks and unknowns

Evidence not provided CFTC The original texts of the interim final rule and proposed rule were not provided, and the specific legal scope remains to be verified.
Evidence does not specify 30 the specific deadline for the public-comment period.
Evidence does not provide the specific content of the U.S. Supreme Court or federal appeals court rulings.
It remains uncertain whether the final rule will take effect and what the outcome of the litigation will be.

U.S.CFTC issues interim rule and proposes bringing prediction-market event contracts under swap regulation

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