Cryptocurrency exchanges Gemini and Coinbase have formally asked U.S. regulators to rethink a proposed rule that would ban event contracts on decentralized prediction markets, including popular platforms like Polymarket. This proposal, introduced by the Commodity Futures Trading Commission (CFTC), aims to eliminate these contracts, which are used to forecast various events.
In a letter dated August 8, addressed to CFTC Secretary Christopher Kirkpatrick, Gemini argued that the ban could significantly harm transparency and stifle innovation in prediction markets. Cameron Winklevoss, co-founder of Gemini, highlighted the distinct advantages of decentralized prediction markets, asserting that they provide a level of financial accountability absent in traditional polls and expert opinions. According to Winklevoss, the requirement for participants to financially back their predictions adds credibility and reliability to the forecasts.
Coinbase has also expressed its opposition to the proposed rule. Paul Grewal, Coinbase’s Chief Legal Officer, criticized the proposal for failing to recognize the benefits of prediction markets and called for a more nuanced approach that supports innovation while addressing public concerns.
The controversy surrounding the proposed regulation has grown, particularly as several U.S. senators and representatives have raised concerns that such markets could influence the 2024 presidential election and undermine public trust in democratic processes. This debate has been fueled by a record surge in trading volumes on Polymarket, driven by increasing speculation about the upcoming election.
