Late Thursday, Coinbase Chief Legal Officer Paul Grewal publicly challenged the Commodity Futures Trading Commission’s (CFTC) proposed ban on event contracts.
Coinbase, Paul Grewal Push Back On CFTC Event Contracts Ban
“Event markets are a promising area of our future economy, and that is why we are responding today to the @CFTC’s notice of proposed rulemaking,” Grewal said in a X post. “We fully support the CFTC’s mission to uphold the integrity of the US derivatives market and believe they can provide a robust regulatory framework for this emerging class of contracts. However, this proposal, if adopted, will ban many prediction contracts without good reason.”
Event markets are a promising area of our future economy, and that is why we are responding today to the @CFTC’s notice of proposed rulemaking. We fully support the CFTC’s mission to uphold the integrity of the US derivatives market and believe they can provide a robust…
— paulgrewal.eth (@iampaulgrewal) August 9, 2024
Following the federal agency vote to ban political bets via event contracts this past May, Grewal takes issue with the CFTC’s “sweeping” definition of gaming.
According to a May press release from the CFTC, the new proposal defines gaming as “staking or risking something of value on the outcome of a political contest, an awards contest, or a game in which one or more athletes compete.”
Grewal argues that not only is this definition “economically unsound,” but is “inconsistent with legislative history, confuses the relationship with longstanding state rules, and could lead to negative consequences for nascent CFTC-regulated markets.”
“We urge the CFTC to withdraw this proposal and work alongside academic, industry, and policy stakeholders to develop a more balanced approach that promotes innovation while protecting the public interest,” the crypto exchange CLO said.
U.S. Lawmakers Urge CFTC To Stop Political Bets
Coinbase’s stand against the ban comes just days after several notable U.S. lawmakers, including Senator Elizabeth Warren (D-MA), issued a letter to CFTC Chairman Rostin Benham urging him to prohibit event contracts concerning the outcome of U.S. elections.
“Political bets change the motivations behind each vote, replacing political convictions with financial calculations,” the lawmakers wrote. “Allowing billionaires to wager extraordinary bets while simultaneously contributing to a specific candidate or party, and political insiders to bet on elections using non-public information, will further degrade public trust in the electoral process.”
Polymarket has surpassed $1 billion in trading volume, with over one-third of the volume generated in the past 30 days alone.#Polymarket #Bettinghttps://t.co/MWySZnqpIO
— Cryptonews.com (@cryptonews) July 30, 2024
Decentralized predictions markets have seemingly ballooned in recent months, with the Shayne Coplan-created Polymarket offering several notable political bets, including whether Republican nominee Donald Trump or Democratic frontrunner Kamala Harris will win the 2024 U.S. presidential election.
A ban on election bets brought forth by the federal regulator would effectively limit the types of event contracts betting markets like Polymarket could allow going forward.
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