Key Highlights
- Hyperliquid Policy Center and Multicoin Capital publicly backed the CFTC’s proposed prediction market framework.
- They argued prediction markets should remain under exclusive federal oversight rather than state gambling laws.
- The statement comes as the CFTC increases scrutiny of event contracts and seeks public input on new rules.
The Hyperliquid Policy Center (HPC) and crypto investment firm Multicoin Capital have urged the Commodity Futures Trading Commission (CFTC) to finalize a clear federal framework for prediction markets, arguing that consistent national rules are essential as trading volumes continue to grow.
In a joint comment letter responding to the CFTC’s Prediction Markets: Public Interest Determinations (RIN 3038-AF65) proposal, the two organizations supported the agency’s approach while recommending several changes aimed at improving regulatory clarity.
According to the letter, prediction market activity has expanded rapidly, with trading volume across major platforms exceeding $50 billion in June, reflecting growing participation in contracts tied to elections, economic data, interest rates and other real-world events.
Why Hyperliquid and Multicoin want federal oversight
A central theme of the submission is that Congress intended prediction markets listed on federally regulated exchanges to fall under the CFTC’s exclusive jurisdiction rather than individual state gambling laws.
The organizations argued that exchange-traded event contracts differ fundamentally from sportsbook wagers because exchanges match buyers and sellers instead of taking the opposite side of every trade.
“Forcing a national market to comply with fifty state gambling regimes would fragment exactly what Congress meant to unify,” they wrote.
The letter comes as several U.S. states continue challenging prediction market platforms, arguing that certain sports-related event contracts should fall under state gaming laws.
What changes they want the CFTC to make
Although supportive of the proposal, HPC and Multicoin said several provisions could be strengthened. The groups asked the Commission to adopt a settlement-based interpretation of the word “involve,” arguing that regulators should focus on what determines a contract’s settlement rather than treating the act of trading itself as gambling.
They encouraged the agency to publish additional examples showing how different event contracts would be evaluated, saying clearer guidance would help exchanges design compliant products. The organizations also called on the CFTC to publish its reasoning whenever it completes a public-interest review, not only when it blocks an event contract, but also when it allows one to remain listed.
According to the letter, publishing both approvals and prohibitions would gradually build a body of precedent that exchanges and developers could rely on.
“Everyone benefits when that reasoning is public, because each published decision becomes guidance the whole market can build on,” they added.
The regulator is refining its approach
The submission comes during an increasingly active period for prediction market regulation. Last month, the CFTC formally launched its rulemaking process to define how event contracts should be evaluated under federal law.
More recently, the agency’s Division of Market Oversight instructed prediction market operators Kalshi and Polymarket to stop relying on broad, template-style self-certifications, arguing that blanket filings make it difficult for regulators to assess whether individual contracts comply with federal requirements.
The guidance followed record trading activity surrounding the FIFA World Cup and reflected the agency’s broader effort to establish more consistent standards for event contracts.
The debate goes beyond prediction markets
The debate over prediction markets has also become part of the broader discussion about the CFTC’s expanding responsibilities.
During recent congressional discussions surrounding the CLARITY Act, lawmakers questioned whether the agency has sufficient staffing and resources to oversee both digital commodity markets and prediction markets if Congress ultimately expands its authority over crypto markets.
Supporters of the CLARITY Act argue the legislation would strengthen the CFTC’s role in supervising digital asset markets, while critics have warned that additional responsibilities should be matched with greater funding and personnel.
Against that backdrop, the Hyperliquid Policy Center and Multicoin argued that establishing clear, technology-neutral rules now would provide certainty for exchanges, developers, and investors while reducing regulatory conflicts between federal and state authorities.
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