Gemini Urges CFTC to Reconsider Ban on Event Contracts

Key Takeaways

• The proposal aims to prohibit contracts that speculate on events such as political contests, gaming, war, assassination, and terrorism.
• Cameron Winklevoss argues that the rule unfairly favors traditional financial markets and stifles innovation.

Leading crypto exchange Gemini, is urging the U.S. Commodity Futures Trading Commission (CFTC) to reconsider its proposed regulation that would ban all event contracts on decentralized prediction markets.

The proposal, which was voted on by the CFTC in May, aims to prohibit contracts that speculate on events such as political contests, gaming, war, assassination, and terrorism.

On August 8, Gemini co-founder Cameron Winklevoss criticized the rule, arguing that it unfairly favors traditional financial markets and stifles innovation. He believes the proposal would limit competition and reduce the benefits of prediction markets, which are known for their reliability in forecasting future events.

In a letter to Christopher Kirkpatrick, the Secretary of the CFTC, Gemini contended that the rule would disadvantage decentralized prediction markets by benefiting established market research and political polling firms. The exchange highlighted that these markets have been valuable for providing accurate forecasts and increasing transparency.

“We highlight the adverse impact that this rule would have on prediction markets, including prediction markets used to forecast elections,” Gemini’s letter reads

Winklevoss also pointed out the potential economic impact of the rule, emphasizing that decentralized prediction markets offer greater access and liquidity and integrate well with cryptocurrency technologies. He argued that such markets require participants to have “skin in the game,” which enhances their accuracy.

The proposed regulation has faced opposition from other crypto industry leaders as well. Coinbase’s Chief Legal Officer, Paul Grewal, criticized the rule for not acknowledging the public benefits of prediction markets. Grewal has called for a more balanced approach that encourages innovation while addressing public concerns.

Recently, a group of Senators and House Representatives has called for a ban on betting related to the 2024 presidential election, arguing that such markets could influence the election and undermine democratic processes.