The US CFTC withdrew its draft ban on politically motivated contracts, predicting a shift in market regulatory stance.

On Wednesday, Mike Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), announced the formal withdrawal of a 2024 draft regulation on "event-based contracts" and the repeal of related guidance issued during the Biden administration. The draft originally aimed to prohibit prediction contracts based on the outcomes of political events, equating them with contracts "against the public interest," such as those related to war or terrorism. Selig stated that the 2024 proposal reflected the previous administration's "overreach in value-judgment-based regulation," and the CFTC will now push forward with a new set of more consistent and rational rules based on the Commodity Exchange Act (CEA) to support responsible innovation in the derivatives market and align with the original intent of Congress. This policy shift sends a clearer regulatory signal to the prediction market. Previously, the CFTC lost a lawsuit against Kalshi, forcing it to allow political prediction contracts to be listed. With the new administration in power, institutions including Coinbase and Cboe have begun actively developing prediction market-related businesses. This withdrawal of the old regulations is seen as a significant turning point in the direction of U.S. prediction market regulation. (CoinDesk)