CFTC Chair Vows to Refresh the Financial Markets Framework

The Commodity Futures Trading Commission (CFTC) is eyeing a rehash of its financial markets ruleset and future-proofing its broader regulatory approach. This comes amid a continued backlash from traditional and tribal gaming industry stakeholders who have been quite unhappy with the rising prediction markets sector.

Selig Opposed Applying Outdated Rules to New Products

Speaking to the Washington Post, Michael Selig, the CFTC’s new chairman, commented on the importance of future-proofing the financial markets space by modernizing its rules. He called this initiative a “generational opportunity” for the CFTC and US finance as a whole.

Selig asserted that the current ruleset is outdated since it was written a long time ago, was designed to govern agricultural futures contracts, and didn’t account for many of the latest developments. He rejected the idea of applying outdated regulations to emerging products, especially novel additions such as artificial intelligence and blockchain technology.

The CFTC chair suggested that updating the rules will also encourage sector frontrunners and visionaries to continue innovating.

In order to create a modern ruleset and “chart a new course,” Selig and the CFTC will initiate a detailed review of the current regulations. The commission will identify the rules that need to be changed and will work with industry stakeholders to create a sensible regulatory framework that takes the intricacies of modern finance into account.

The CFTC Didn’t Indicate Plans to Crack Down on Prediction Markets

Selig, however, remained somewhat vague about the prediction markets sector, which has been attracting animosity from traditional sports betting industry stakeholders, tribal gaming entities and regulators alike.

Betting stakeholders have long asked the CFTC to get the prediction markets space under control, arguing that the current framework undermines the US gaming industry. For context, sportsbooks need to navigate a fairly complex regulatory landscape, following certain sets of rules in each state that allows the vertical. Prediction markets, on the other hand, are officially classified as financial markets and, as such, are under the CFTC’s purview. This effectively allows them to operate in all 50 states with a single license.

The dissatisfaction with the rapid growth of prediction markets has been growing stronger, mirroring previous pushback against other betting alternatives, such as sweepstakes. However, the CFTC has refrained from taking drastic action, suggesting that it is inclined to keep the current system in place. This aligns with his vow to drive innovation within the financial markets sector and encourage stakeholders to adopt new technology and products.

This hasn’t stopped individual states from trying to oppose the encroaching prediction markets sector. Kalshi, for example, was just blocked from offering its products in Massachusetts, at least for now.