CFTC Chairman Michael Selig is trying to move prediction markets and cryptocurrencies out of the legal gray zone by removing a de facto ban and replacing it with a derivatives-style rulebook that the agency, not the states, will control.
Summary
- Selig withdrew a proposed ban on event contracts by 2024 and a notice to staff by 2025, ordering a new rulebook aimed at “supporting the responsible development” of event markets.
- The CFTC is asserting “exclusive jurisdiction” over prediction markets and taking action to support a registered exchange against Nevada gambling rules, setting up a federal-state preemptive fight.
- Through the Crypto Project with the SEC, Selig wants unified crypto rules, a shared token taxonomy, and local criminals and tokenized assets, in exchange for stricter surveillance and insider trading enforcement.
CFTC Chairman Michael Selig is trying to move prediction markets and cryptocurrencies out of a legal gray area and into a federal framework that more closely resembles traditional derivatives, while fighting states and players at the same time.
According to a new report On CoinDesk, “Selig reiterated that the CFTC will issue guidance to clarify how prediction markets, known as event contracts in regulation, can list and trade products under U.S. law and will launch a rulemaking process seeking public input on how the fast-growing sector should be overseen.”
Event contracts: from the threat of a ban to the rule book
In his first major policy speech, on January 29, 2026, Selig said the CFTC would scrap a 2024 proposal that would have effectively banned contracts for events related to sports and politics and withdraw a 2025 staff notice that warned platforms to stay away from sports markets, admitting that the notice had “inadvertently increased the uncertainty present in our markets.” Instead, it directed staff to draft new “event contract regulations” to “establish clear standards for event contracts that provide certainty to market participants” and “support the responsible development of event contract markets,” which the CFTC views as tools for hedging risks and aggregating information, not just betting.
At the same time, Selig is asserting his territory. In speeches, an interview with Axios and an AP-covered op-ed in the Wall Street Journal, he has argued that prediction markets are subject to the Commodity Exchange Act and that the CFTC has “exclusive jurisdiction” over them, promising that the agency “will no longer remain passive as overly aggressive governments undermine [its] jurisdiction… by attempting to impose statewide bans on these innovative products.” The commission has already asked the Ninth Circuit for permission to file an amicus curiae brief supporting an exchange registered by the CFTC in its fight against Nevada’s attempt to regulate contracts for events such as gambling, setting up an eventual preemption conflict that could reach the Supreme Court.
Insider Trading, Surveillance and Crypto Project
Selig’s stance is not a free pass. It has repeatedly framed exchanges as the “first line of defense” against insider trading, and summaries of its agenda by law firms emphasize that prediction platforms should improve compliance, particularly with regard to “permissible use of material non-public information.” The Justice Department is already circling: The SDNY U.S. Attorney has publicly warned that “placing a bet through a prediction market does not protect you from fraud,” citing cases in which bettors used inside information about a basketball player’s availability to manipulate prop bets (the same logic that could apply to political, political, or war-related markets).
Cryptocurrencies are interwoven into this. In the same speech, Selig announced “Project Crypto”, a formal coordination with the SEC aimed at offering “clear and lasting rules of the road” for digital asset marketsincluding joint work on a taxonomy of cryptoassets and increased eligibility for tokenized collateral. He also said he wants to “integrate perpetual products and other novel derivative products so that they can prosper… subject to appropriate safeguards,” noting that the CFTC is willing to own felons, tokenized stocks, and prediction markets, as long as they move within its regulatory perimeter.
Put bluntly: Selig is offering a deal to the crypto and prediction markets. The CFTC struggle states that want to treat everything as gambling and will abandon blanket bans on sports and political contracts, but in exchange, platforms like Polymarket and Kalshi must accept strong surveillance, insider trading enforcement, and a derivatives-style rulebook instead of the free-for-all degen that built the first wave of volume.
