The CFTC of the United States withdraws the draft ban on political event contracts, predicting a shift in market regulatory stance

On Wednesday, CFTC Chairman Mike Selig announced the formal withdrawal of the "event contract" regulatory proposal put forward in 2024, and the repeal of a related guidance issued during the Biden administration.

The proposal originally aimed to prohibit prediction contracts based on the outcomes of political events, equating them with contracts related to war, terrorism, and other "against public interest" matters. Selig stated that the 2024 proposal was a manifestation of the previous administration's "overreaching value judgment regulation." The CFTC will reintroduce a new set of rules based on the Commodity Exchange Act (CEA) that is more consistent and rational, to support responsible innovation in the derivatives market and align with the legislative intent of Congress. This policy adjustment sends a clearer regulatory signal for prediction markets. Previously, the CFTC lost a lawsuit against Kalshi, which forced it to allow political prediction contracts to launch. With the new administration in place, institutions including Coinbase and Cboe have also begun actively engaging in prediction market-related businesses. The withdrawal of the old regulations is seen as a significant turning point in the direction of U.S. prediction market regulation.