Gemini, a leading cryptocurrency exchange, moves to defend the legal status of crypto prediction platforms. The exchange called for the withdrawal of a controversial rule proposed by the Commodity Futures Trading Commission (CFTC). It joins Coinbase in resisting the new rule that will “ban crypto prediction platforms.”
According to Cameron Winklevoss, co-founder of Gemini, cryptocurrency prediction services have a higher level of integrity than other platforms.
“We highlight the adverse impact that this rule would have on prediction markets, including prediction markets used to forecast elections,” Gemini stated in an August 8 letter to Christopher Kirkpatrick, the US Commodity Futures Trading Commission (CFTC) secretary.
Gemini argues that prediction markets serve public interest
According to the letter Gemini sent, the proposed rule poses a major threat to the prediction markets and their ability to function as they should. The firm also argued that decentralized prediction markets are a notable innovation with substantial public utility.
Winklevoss further emphasized the importance of decentralized prediction markets, asserting that they require participants to have “skin in the game.”
He elaborated in an X post on August 9 that the CFTC’s proposed rule on event contracts would effectively ban all such contracts in the US, including those traded on Polymarket, the world’s largest prediction market.
Coinbase Chief Legal Officer, Paul Grewal also joined Gemini in resisting the CFTC’s ruling. He recently took to X to express his disapproval of the proposed legislation. He shared his firm belief that the proposal could harm the emerging prediction markets saying, “This proposal if adopted, will ban many prediction contracts without good reason.”
He further presented his point by highlighting the potential negative impact on contracts related to events such as the Nobel Prizes and the Oscars. Paul Grewal noted that the proposal has a definition problem.
CFTC faces pressure over proposal to ban crypto prediction markets
There is renewed pressure on the CFTC to prohibit placing bets on the 2024 presidential race. This follows the renewal of demands by five US Senators and three members of the House.
They argue that these betting markets “pose a risk to the integrity of elections and undermine the public’s confidence in democratic processes” in a letter sent to the CFTC Chair, Rostin Benham, on August 5.
The CFTC, led by Chairman Rostin Behnam, emphasizes protecting the integrity of the democratic process, suggesting the CFTC would become an “election cop” if forced to oversee such markets. The CFTC is not a gambling regulator, and the agency would not be capable of ensuring market integrity in this field.
Prediction platforms such as PredictIt, Polymarket, Zeitgeist, and Kalshi allow users to buy contracts based on the outcomes of actual events such as elections and policy developments. These platforms have gained a lot of popularity in the cryptocurrency market.
