Coinbase Opposes CFTC’s Proposed Event Contract Restrictions
Coinbase has publicly opposed the Commodity Futures Trading Commission’s (CFTC) proposed ban on certain event contracts.
The response was written by Coinbase Chief Legal Officer Paul Grewal in a recent letter.
Key points:
- The CFTC’s definition of “gaming” is overly broad and inconsistent with legislative intent.
- The proposed ban could stifle innovation in prediction markets.
- The CFTC’s cost-benefit analysis is inadequate.
Coinbase has submitted a detailed response to the CFTC’s Notice of Proposed Rulemaking on Event Contracts. The exchange argues that the proposed amendments would effectively ban a wide range of event contracts under an expanded definition of “gaming.” According to the exchange, these are beyond the CFTC’s statutory authority.
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Coinbase argues CFTC’s gaming definition is too broad
Coinbase argues that CFTC’s proposed definition of “gaming” is far too broad. The exchange contends that this interpretation would capture events that are not traditionally considered gaming, such as elections and professional awards.
Coinbase stated that this goes beyond the intent of Congress and could potentially stifle innovation in the prediction market industry. The exchange mentioned that prediction markets can serve as valuable tools for aggregating dispersed information and producing accurate forecasts.
Furthermore, Coinbase argues that the Commission has failed to fully consider the potential positive impacts of event contracts on market efficiency. Instead, Coinbase suggests, the CFTC has focused primarily on the administrative benefits of banning these contracts, such as reduced regulatory workload.
Coinbase’s response also raises important questions about the process of regulatory decision-making. The exchange argues that the CFTC’s proposal represents a different stance from its longstanding practice of reviewing contracts on a case-by-case basis.
