CFTC Chairman Mike Selig stated that the agency will persist in defending its exclusive regulatory authority over prediction markets in court, emphasizing that any product offered within a CFTC-regulated exchange falls under federal regulation, regardless of the subject matter. Selig's remarks came on the sidelines of the Digital Assets and Emerging Tech Policy Summit, where he asserted that the CFTC's lawsuits against several states aim to establish the agency's clear regulatory authority over commodity derivatives markets.
The recent Third Circuit Court ruling, which obliges the CFTC to oversee prediction markets, has reinforced the agency's stance. Under Selig's leadership, the CFTC has launched a significant litigation effort to argue that prediction markets provide derivatives products under the Commodity Exchange Act, rather than gambling services regulated by states.
The agency's view is that federal regulation applies to swaps offered on federally regulated Designated Contract Markets, superseding state laws. Selig noted that the CFTC's authority to regulate swaps and block certain types is rooted in the Dodd-Frank Act, which empowers the agency to decide whether a product is in the public interest. The CFTC is currently engaged in a formal rulemaking process to clarify its oversight of prediction markets and is open to suggestions on the process.
Additionally, the agency will review comments on its recently published interpretative guidance with the Securities and Exchange Commission, aiming to establish clear lines between commodities and securities.