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CFTC Chairman Michael Selig is trying to drag prediction markets and crypto out of the legal grey zone by scrapping a de facto ban and replacing it with a derivatives\u2011style rulebook the agency, not the states, will control.<\/p>\n
\n Summary<\/span>\n <\/p>\n <\/p>\n CFTC Chairman Michael Selig is trying to drag prediction markets and crypto out of a legal grey zone and into a federal framework that looks more like traditional derivatives \u2013 while fighting off states and gamblers at the same time.<\/p>\n According to a new report<\/a> in CoinDesk, \u201cSelig reiterated the CFTC will issue guidance to clarify how prediction markets, known as event contracts in regulation, can list and trade products under U.S. law and will launch a rulemaking process seeking public input on how the fast-growing sector should be overseen.\u201d<\/p>\n In his first major policy speech on January 29, 2026, Selig said the CFTC will scrap a 2024 proposal that would have effectively banned sports\u2011 and politics\u2011related event contracts and withdraw a 2025 staff advisory that warned platforms off sports markets, admitting the advisory had \u201cinadvertently added to the uncertainty present in our markets.\u201d Instead, he ordered staff to draft a new \u201cevent contracts rulemaking\u201d to \u201cestablish clear standards for event contracts that provide certainty to market participants\u201d and \u201csupport the responsible development of event contract markets,\u201d which the CFTC views as tools to hedge risk and aggregate information, not just wagers.<\/p>\n At the same time, Selig is asserting turf. In speeches, an Axios interview and an AP\u2011covered Wall Street Journal op\u2011ed, he has argued that prediction markets fall under the Commodity Exchange Act and that the CFTC has \u201cexclusive jurisdiction\u201d over them, vowing the agency \u201cwill no longer remain passive while overly aggressive governments undermine [its] jurisdiction\u2026 by attempting to impose statewide bans on these innovative products.\u201d The commission has already asked the Ninth Circuit for permission to file an amicus brief backing a CFTC\u2011registered exchange in its fight against Nevada\u2019s attempt to regulate event contracts as gambling, setting up an eventual pre\u2011emption clash that could go as high as the Supreme Court.<\/p>\n Selig\u2019s stance is not a free pass. He has repeatedly framed exchanges as the \u201cfirst line of defense\u201d against insider trading, and law\u2011firm summaries of his agenda stress that prediction platforms should upgrade compliance, particularly around the \u201cpermissible use of material non\u2011public information.\u201d The Department of Justice is already circling: the U.S. Attorney for SDNY has publicly warned that \u201cplacing a bet through a prediction market doesn\u2019t insulate you from fraud,\u201d citing cases where bettors used inside information about a basketball player\u2019s availability to rig prop bets \u2013 the same logic that could apply to political, policy or war\u2011related markets.<\/p>\n <\/p>\n Crypto is woven into this. In the same speech, Selig announced \u201cProject Crypto,\u201d a formal coordination with the SEC intended to deliver \u201cclear, durable rules of the road\u201d for digital\u2011asset markets<\/a>, including joint work on a crypto\u2011asset taxonomy and expanded eligibility for tokenized collateral. He also said he wants to \u201conshore perpetual and other novel derivative products so that they can flourish\u2026 subject to appropriate safeguards,\u201d signalling that the CFTC<\/a> is willing to own perps, tokenized stocks and prediction markets \u2013 as long as they move inside its regulatory perimeter.<\/p>\n Put bluntly: Selig is offering crypto and prediction markets a deal. The CFTC will fight<\/a> states that want to treat everything as gambling and will abandon blanket bans on sports and political contracts \u2013 but in exchange, platforms like Polymarket and Kalshi must accept heavy surveillance, insider\u2011trading enforcement and a derivatives\u2011style rulebook rather than the degen free\u2011for\u2011all that built the first wave of volume.<\/p>\n <\/p><\/div>\n\n\n
Event contracts: from ban threat to rulebook<\/h2>\n
Insider trading, surveillance and Project Crypto<\/h2>\n