Gemini Urges CFTC to Withdraw Rule Targeting Event Contracts in Crypto Prediction Markets

YEREVAN (CoinChapter.com) — Cryptocurrency exchange Gemini has urged U.S. regulators to reconsider a proposed rule from the Commodity Futures Trading Commission (CFTC) that could ban event contracts on decentralized prediction markets like Polymarket.

These platforms allow users to predict the outcomes of events such as elections. In an Aug. 8 letter to CFTC Secretary Christopher Kirkpatrick, Gemini expressed concerns that the regulation could negatively impact these markets, particularly those related to elections. The exchange highlighted that decentralized prediction markets offer valuable transparency and reliability in forecasting, often outperforming traditional polling methods.

Winklevoss Highlights Integrity of Crypto Prediction Markets

Cameron Winklevoss, co-founder of Gemini, expressed his concerns on social media. On Aug. 9, he posted on X, stating that platforms like Polymarket provide a level of integrity that is unmatched by other methods. He further emphasized that participants in these markets have “skin in the game,” making the predictions more accurate.

Winklevoss urged the CFTC to reconsider its stance on the rule, noting that the transparency and proof-of-stake requirements on these platforms help maintain trust and integrity in the prediction process.

Coinbase Urges CFTC to Consider Public Benefits in Regulation

Other major players in the crypto industry share Gemini’s opposition. Coinbase, another cryptocurrency exchange, also raised objections to the CFTC’s proposal. Paul Grewal, Coinbase’s Chief Legal Officer, pointed out that the proposed rule fails to recognize the public benefits provided by prediction markets.

Grewal suggested that the CFTC should work with stakeholders from academia, industry, and policy to create a more balanced regulatory approach. He believes this collaboration could protect the public interest while allowing for continued innovation.

Lawmakers Urge CFTC to Ban Election Betting as Polymarket Trading Surges

The debate over the proposed rule follows concerns from U.S. lawmakers about the potential impact of prediction markets on elections. On Aug. 5, five U.S. Senators and three House representatives called on the CFTC to ban betting on the 2024 presidential election.

In a letter to CFTC Chair Rostin Benham, the lawmakers argued that prediction markets could influence election outcomes and undermine public trust in democracy. Their concerns are timely, as trading volumes on Polymarket have surged due to speculation surrounding the upcoming election.

Data from Dune Analytics shows that Polymarket recorded $387.03 million in trading volume in July, significantly surpassing its previous peak of $111.5 million in June. This increase highlights the growing interest in election-related prediction markets.