CFTC Chairman Michael Selig is trying to drag prediction markets and crypto out of the legal grey zone by scrapping a de facto ban and replacing it with a derivatives‑style rulebook the agency, not the states, will control.
Summary
- Selig withdrew the 2024 event‑contracts ban proposal and a 2025 staff advisory, ordering a new rulebook meant to “support the responsible development” of event markets.
- The CFTC is asserting “exclusive jurisdiction” over prediction markets and moving to back a registered exchange against Nevada’s gambling rules, setting up a federal–state pre‑emption fight.
- Through Project Crypto with the SEC, Selig wants unified crypto rules, a shared token taxonomy and onshored perps and tokenized assets, in return for tighter surveillance and insider‑trading enforcement.
CFTC Chairman Michael Selig is trying to drag prediction markets and crypto out of a legal grey zone and into a federal framework that looks more like traditional derivatives – while fighting off states and gamblers at the same time.
According to a new report in CoinDesk, “Selig reiterated 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 ban threat to rulebook
In his first major policy speech on January 29, 2026, Selig said the CFTC will scrap a 2024 proposal that would have effectively banned sports‑ and politics‑related event contracts and withdraw a 2025 staff advisory that warned platforms off sports markets, admitting the advisory had “inadvertently added to the uncertainty present in our markets.” Instead, he ordered staff to draft a new “event contracts rulemaking” 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 to hedge risk and aggregate information, not just wagers.
At the same time, Selig is asserting turf. In speeches, an Axios interview and an AP‑covered Wall Street Journal op‑ed, he has argued that prediction markets fall under the Commodity Exchange Act and that the CFTC has “exclusive jurisdiction” over them, vowing the agency “will no longer remain passive while 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 brief backing a CFTC‑registered exchange in its fight against Nevada’s attempt to regulate event contracts as gambling, setting up an eventual pre‑emption clash that could go as high as the Supreme Court.
Insider trading, surveillance and Project Crypto
Selig’s stance is not a free pass. He has repeatedly framed exchanges as the “first line of defense” against insider trading, and law‑firm summaries of his agenda stress that prediction platforms should upgrade compliance, particularly around the “permissible use of material non‑public information.” The Department of Justice is already circling: the U.S. Attorney for SDNY has publicly warned that “placing a bet through a prediction market doesn’t insulate you from fraud,” citing cases where bettors used inside information about a basketball player’s availability to rig prop bets – the same logic that could apply to political, policy or war‑related markets.
Crypto is woven into this. In the same speech, Selig announced “Project Crypto,” a formal coordination with the SEC intended to deliver “clear, durable rules of the road” for digital‑asset markets, including joint work on a crypto‑asset taxonomy and expanded eligibility for tokenized collateral. He also said he wants to “onshore perpetual and other novel derivative products so that they can flourish… subject to appropriate safeguards,” signalling that the CFTC is willing to own perps, tokenized stocks and prediction markets – as long as they move inside its regulatory perimeter.
Put bluntly: Selig is offering crypto and prediction markets a deal. The CFTC will fight 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 heavy surveillance, insider‑trading enforcement and a derivatives‑style rulebook rather than the degen free‑for‑all that built the first wave of volume.
