The Digital Chamber released on Mar. 17 a framework from its Prediction Markets Working Group that supports the responsible development and regulation of prediction markets overseen by the Commodity Futures Trading Commission (CFTC).
The group said its goal is to promote price discovery, risk management, and information aggregation in federally regulated derivatives markets. The framework highlights the importance of blockchain-enabled technologies in commodities trading, citing their transparency and fast settlement features.
According to the document, members of the working group include former CFTC staff, legal experts, and infrastructure service providers. They aim to bring technical and legal expertise to ensure practical regulations for this growing industry. The group advocates for federal regulatory clarity, stating that federal commodities law should be the exclusive framework for CFTC-regulated event contract markets. It warns that regulatory fragmentation could undermine market stability and consumer protection.
The framework also calls for strong market integrity measures such as robust listing standards, anti-manipulation controls, transparency requirements, margin safeguards, and surveillance mechanisms consistent with best practices in derivatives markets. It distinguishes prediction markets from traditional gambling models by emphasizing differences in governance, clearing processes, capital controls, and risk management.
Key policy objectives include encouraging formal rulemaking by the CFTC specific to prediction markets; clarifying federal authority over these contracts; supporting a coherent national approach through strategic litigation; demonstrating industry support for market integrity; and educating state regulators about the distinction between derivatives markets and gaming laws.
The Digital Chamber plans to submit comment letters to regulators, publish policy papers and legal analyses, file amicus briefs in relevant litigation, convene roundtables with stakeholders, develop disclosure standards for event contracts, and produce educational materials for policymakers.
