CFTC reaffirms federal control over crypto prediction markets

The CFTC reasserts federal authority over crypto prediction markets, warns states against interference, and supports Crypto.com in litigation, defending these markets as financial instruments.

The Commodity Futures Trading Commission (CFTC) has reaffirmed its exclusive federal authority over cryptocurrency prediction markets, including platforms like Polymarket and Kalshi, amid rising legal disputes with state regulators. CFTC Chairman Mike Selig stated that the agency will not permit states to enforce their own gambling laws on federally regulated platforms, warning that such challenges will be contested in court. The CFTC recently filed an amicus curiae brief with the Ninth Circuit Court of Appeals in support of Crypto.com—its first direct intervention in nearly 50 ongoing state lawsuits against federally registered crypto exchanges. Selig emphasized that prediction markets are legitimate financial instruments, not gambling activities, and have been regulated by the CFTC for over two decades. The agency’s firm stance aims to prevent regulatory fragmentation and maintain federal oversight as the sector grows and becomes more complex with new entrants and increased SEC involvement.