Gemini has joined other crypto leaders to oppose a new rule proposed by the US Commodity Futures Trading Commission (CFTC). The proposed regulation could potentially ban political prediction markets in the US.
Political prediction markets, which allow individuals to place bets on the outcomes of future events, are popular as a tool for forecasting and informed decision-making. These markets are seen by many as providing valuable insights into public opinion and future trends.
In a formal response, Gemini addressed a letter to Christopher Kirkpatrick, Secretary of the CFTC.
Gemini urged the Commission to withdraw the proposal. The letter argued that the proposal is not only inconsistent with the regulatory framework of the Commodity Exchange Act (CEA) but also contrary to the public interest.
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Gemini Criticizes Broad Definition of Gambling
Gemini’s main concern lies in the proposal’s broad definition of all event contracts involving “gioco d’azzardo” (gambling) as “inherently against public interest.” The company insisted that such a rule could have a detrimental impact on prediction markets, particularly those related to elections.
Cameron Winklevoss, co-founder of Gemini, expressed his opposition through a post on the social media platform X. He argued that these markets are a major innovation with real public utility, as they compel participants to back their predictions with financial stakes.
Decentralized prediction markets are a significant innovation with real public utility. They provide valuable information on future events that is rooted in financial accountability. Unlike polls, pundits, or expert opinions, they require participants to put their money where… pic.twitter.com/Il9tiEyQqW
— Cameron Winklevoss (@cameron) August 10, 2024
A number of other crypto leaders have voiced opposition to the CFTC’s proposal. Steve Humenik, Senior Vice President at Crypto.com, submitted a formal comment to the CFTC, urging the agency to remain within its regulatory boundaries.
Humenik pointed out that Congress could have explicitly prohibited certain types of event contracts but chose not to, implying that the CFTC should not overstep its mandate.
Dragonfly Capital, a venture capital firm prominent in the crypto space, also weighed in on the debate. In a joint comment, Jessica Furr and Bryan Edelman, associate general counsels at Dragonfly, referenced a recent Supreme Court decision that could limit the CFTC’s authority.
They argued that the CFTC’s jurisdiction over election-related contracts should be determined by the courts, emphasizing that the agency is not equipped to regulate markets related to gambling or elections.
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US Senators Ask CFTC To Ban Political Betting
Last week, a bipartisan group of US Senators and House representatives, including Jeff Merkley, Richard Blumenthal, Elizabeth Warren, Jamie Raskin, and John Sarbanes, called for a ban on political betting ahead of the 2024 presidential election.
In a letter to CFTC Chair Rostin Behnam, they warned that political betting could compromise the integrity of the electoral process by incentivizing financial motives over political convictions.
The legislators underscored that elections should not be reduced to mere profit-making ventures, as this would fundamentally compromise the integrity of the electoral system. “Political bets change the motivations behind each vote, replacing political convictions with financial calculations.”
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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