On Tuesday, less than a month into his tenure as chairman of the US Commodity Futures Trading Commission, Michael Selig announced an initiative to “future-proof” the regulator to better account for emerging financial technologies like cryptocurrency and prediction markets.
In an op-ed for the Washington Post and on social media, Selig decried the commission’s existing structure, which he described as “arbitrary, cumbersome and opaque”.
Instead, the new chairman asserted, modern fintech innovations require a “comprehensive review of the agency’s existing rules” as well as “clear and fit-for-purpose regulations” for emerging asset classes. To the chagrin of gambling industry stakeholders, it appears that prediction markets will play a significant role in those efforts.
“Prediction markets have exploded in popularity as broad swaths of market participants seek to hedge portfolio risks and test their abilities to forecast truth,” Selig wrote.
At his confirmation hearing in November, Selig eschewed the legal issues surrounding prediction markets and sports event contracts, which have inspired a multitude of lawsuits and cease-and-desist orders from states. He said those were matters “for the courts” to decide and pledged to “uphold and stick to the law”. Now, with the full backing of US President Donald Trump, Selig’s tone has shifted considerably .
“To achieve the golden age of American financial markets, as the president might call it, regulators must break with the rigid and restrictive regulatory practices of the past,” he wrote. “The CFTC will seize this generational opportunity to modernise and future-proof its approach to regulation and ensure that the great innovations of today and tomorrow are made in America.”
Massive crypto market bill hanging in balance
The pretext of Selig’s announcement is a sweeping cryptocurrency market structure bill, which passed the House in July and is currently working its way through the Senate. The legislation is facing late pushback, however, as the Senate Banking Committee cancelled a vote on the bill last week. Its future is now uncertain, and supporters are getting unsettled as the opportunity fades.
Two gaming industry lobbying groups, the American Gaming Association and Indian Gaming Association, sent a joint letter to Congress this month imploring lawmakers to use the crypto bill as a means to include language banning sports event contracts. The contracts have “grown exponentially in trading volume” and have unearthed myriad integrity concerns, the groups argued.
“This growth has occurred by exploiting regulatory inaction by the Commodity Futures Trading Commission (CFTC), which undermines state law and tribal sovereignty and flies in the face of existing federal laws and regulation intended to protect consumers and the integrity of our nation’s financial markets,” the letter said.
“We firmly believe that congressional consideration of cryptocurrency market structure legislation provides an important, bipartisan opportunity to prevent sports betting and casino gambling under the guise of ‘event contracts.’”
Selig urges Congress to ‘pass the torch’ to CFTC
A surprise opponent of the crypto bill is Coinbase CEO Brian Armstrong, who said on X last week that he’d “rather have no bill than a bad bill”, taking issue with some of the draft language. His pushback and the subsequent dialogue were seen as primary reasons for the cancellation. Coinbase notably operates its own prediction market product and acquired another prediction platform in December.
Last year, input from crypto interests also played a significant role in Selig’s rise to become CFTC chair. Trump’s first nominee, Brian Quintenz, saw his nomination delayed and later withdrawn in part because of pushback from Cameron and Tyler Winklevoss, crypto billionaires with close ties to Trump.
After Quintenz’s ouster, Selig took the mantle and ultimately secured the position. If the bill passes, Selig wrote, the commission will have a much more prominent place in the financial ecosystem than it has historically.
“Should Congress deliver on making America the crypto capital of the world and send digital asset market structure legislation to the president’s desk, the CFTC will have a broad set of new responsibilities,” he wrote. “Pass us the torch, and we will ensure that these markets flourish at home with tailored regulatory frameworks that keep American markets the best in the world.”
Marked shift from Biden administration
There were multiple allusions in Selig’s article to the Biden administration and its more restrictive stance on crypto and prediction markets. In 2024, the federal government under Biden sued the prediction market Kalshi for offering election betting and lost, and the agency’s appeal of that decision was dropped after Trump took office. Kalshi’s victory in that case became one of the biggest catalysts for its growth.
Before Kalshi, the CFTC under Biden prevented another exchange, ErisX, from offering NFL contracts. Quintenz was a commissioner at that time and publicly disagreed with that decision. Previous CFTC leadership had also blocked Polymarket, perhaps the biggest and most controversial prediction platform, from operating in the US, although that company is now poised to relaunch domestically.
Selig seemed to allude to these developments but did not name any companies specifically.
“Instead of developing guardrails that foster ingenuity, the Biden administration focused on regulation by enforcement – subjecting novel products such as digital assets and perpetual futures to legacy rules that could not fit the product, but could fit the prosecutor,” he wrote. “This aversion to innovation sent many of the most enterprising businesses offshore, and everyday Americans paid the price.”
The CFTC’s most recent proposed rule changes are from 2020, when Trump was still in office for his first term. Last September the commission held a roundtable with officials from the Securities and Exchange Commission about harmonising regulatory efforts, although it remains unclear as to what that might entail.
Jess Marquez
Jess has covered the global gaming industry since 2022. A native of Reno, Nevada, he’d like to note that it’s Ne-va-da, not Ne-VAH-da.
The newly appointed head of the US regulator is wasting no time in proposing big changes.