Quick Breakdown
- CFTC plans a new rulebook for prediction markets as event-based trading surges.
- Political and sports contract restrictions may be rolled back following staff guidance withdrawals.
- Closer coordination between the CFTC and SEC aims to reduce regulatory uncertainty in crypto and derivatives markets.
The US derivatives regulator is preparing a new regulatory framework for prediction markets, as platforms like Polymarket and Kalshi attract billions of dollars in trading by allowing users to wager on outcomes tied to politics, sports, and real-world events.
Remarks of @ChairmanSelig on the Next Phase of Project Crypto: Unleashing Innovation for the New Frontier of Finance. https://t.co/6AUd6GqPHj
— CFTC (@CFTC) January 29, 2026
In his first public address as chairman of the Commodity Futures Trading Commission (CFTC) on Thursday, Michael Selig said the agency will push for clearer, more workable standards for event contracts, a market segment the CFTC has overseen for more than 20 years but which has recently expanded at an unprecedented pace.
Prediction markets gain traction beyond niche trading
Prediction markets have moved into the mainstream as both crypto-native platforms and regulated US firms compete to offer round-the-clock exposure to breaking news and public sentiment.
Polymarket has emerged as a major liquidity hub for political and real-time event trading, with individual markets often drawing tens of millions, and in some cases hundreds of millions, in volume. The surge has caught the attention of regulators, even as some state gaming authorities raise concerns over the expansion of event-based betting.
Selig positioned the CFTC as a regulator willing to adapt, emphasizing regulatory clarity, inter-agency coordination, and what he described as “permissionless innovation” as core priorities.
CFTC signals rollback of restrictions, eyes formal rulemaking
As a first step, Selig said he has instructed staff to withdraw a 2024 proposal that would have banned political and sports-related event contracts, as well as a 2025 staff advisory warning registrants about offering sports-based contracts amid ongoing litigation.
Looking ahead, the CFTC will begin drafting a formal rulebook for event contracts, a move Selig said is long overdue, given the difficulty of the existing framework for market participants to interpret.
The agency is also coordinating with the Securities and Exchange Commission through “Project Crypto,” an initiative aimed at clarifying jurisdictional boundaries and aligning federal oversight of digital assets. Selig said the CFTC will reassess its role in ongoing court cases and work with the SEC on joint interpretations to better distinguish between commodities, securities, and derivatives.
Calling the moment a “generational opportunity,” Selig said the US is entering a new era of crypto and derivatives regulation focused on clarity rather than enforcement-driven crackdowns.
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