Coinbase Chief Legal Officer Paul Grewal has raised concerns on social media regarding the Commodity Futures Trading Commission’s (CFTC) proposed rule to ban certain event contracts. Coinbase has also formally responded to the proposal, urging the CFTC to reconsider its stance, which the company argues could stifle innovation in the prediction markets.
Coinbase Urges CFTC to Rethink Event Contract Ban, Citing Innovation Risks
Paul Grewal took to X, formerly known as Twitter, to express his disapproval of the CFTC’s proposed rulemaking, which he believes could harm the emerging prediction markets. Grewal said, “This proposal, if adopted, will ban many prediction contracts without good reason,” highlighting the potential negative impact on contracts related to events such as the Nobel Prizes and the Oscars.
He further emphasized:
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Simply put, the proposal has a definition problem.
Coinbase, in its official response to the CFTC, supported the Commission’s mission to maintain the integrity of U.S. derivatives markets but criticized the proposal’s broad definition of “gaming” as overreaching. The company argued that the proposed rule could inadvertently ban economically viable contracts that are not traditionally considered gaming.
“We urge the Commission to withdraw this Proposal and instead adopt an approach that is consistent with the CEA and the Commission’s mission to protect innovation in U.S. markets,” Grewal wrote in the letter.
The response from Coinbase comes amid increased scrutiny of prediction markets like Polymarket, particularly those related to political events. Recently, a group of Democrat lawmakers, including Massachusetts Senator Elizabeth Warren, called on the CFTC to prohibit election-related gambling, citing concerns about the potential influence on democratic processes. These developments add to the growing debate over the future of prediction markets in the United States.
Source: https://news.bitcoin.com/coinbase-challenges-cftc-proposal-advocates-for-balanced-regulation-of-event-contracts/