Crypto exchange Coinbase has urged the U.S. Commodity Futures Trading Commission (CFTC) to adopt a clearer regulatory framework for prediction markets, arguing that well-defined rules would provide greater legal certainty as the sector continues to expand.
In an X post on Tuesday, Coinbase Chief Policy Officer Faryar Shirzad said the exchange responded to the CFTC’s Notice of Proposed Rulemaking (RIN 3038-AF65) on public interest determinations for event contracts. He said it supports updating the Commission’s current approach under CFTC Rule 40.11 and called for a more structured review process.
How Coinbase thinks rules should work
A central recommendation in Coinbase’s letter is that the CFTC should treat two statutory questions separately when reviewing event contracts.
According to the exchange, the Commission should first determine whether a contract falls within one of the “enumerated activities” identified in the Commodity Exchange Act (CEA). Only after that analysis should regulators decide whether the contract is contrary to the public interest.
Coinbase argued that combining the two inquiries creates unnecessary legal uncertainty and is inconsistent with the structure of the CEA. Separating them, the company said, would provide market participants with clearer guidance while remaining faithful to the statute.
Why the proposal matters
Coinbase said prediction markets have become one of the fastest-growing areas of the derivatives industry, serving as tools for both risk management and information discovery across a wide range of events.
As participation increases, the exchange argued that regulatory clarity is becoming more important. A transparent framework, it said, would help exchanges and market participants better understand which contracts are permissible while allowing the CFTC to continue protecting the public interest.
The company added that clearer standards would reduce regulatory uncertainty without limiting the Commission’s authority to prohibit contracts that conflict with the Commodity Exchange Act.
Coinbase isn’t alone in calling for change
Coinbase’s comments follow similar recommendations from the Hyperliquid Policy Center (HPC) and crypto investment firm Multicoin Capital, which also urged the CFTC to establish a clear federal framework for prediction markets.
In a joint comment letter responding to the same Prediction Markets: Public Interest Determinations (RIN 3038-AF65) proposal, the two organizations supported the Commission’s rulemaking while recommending changes to improve regulatory clarity. They noted that prediction market trading has expanded rapidly, with volume across major platforms exceeding $50 billion in June, driven by contracts linked to elections, economic indicators, interest rates, and other real-world events.
The groups argued that Congress intended prediction markets listed on federally regulated exchanges to fall under the CFTC’s exclusive jurisdiction rather than a patchwork of state gambling laws. According to the letter, exchange-traded event contracts differ from traditional sportsbooks because exchanges simply match buyers and sellers instead of taking the opposite side of every trade.
Their comments come as several U.S. states continue challenging prediction market platforms over sports-related event contracts. “Forcing a national market to comply with fifty state gambling regimes would fragment exactly what Congress meant to unify,” the organizations wrote.
Coinbase backs modernization of CFTC rules
In its filing, Coinbase described the proposed rulemaking as a meaningful improvement over the existing regulatory framework governing event contracts. The exchange said the Commission’s effort to clarify public interest determinations could create a more predictable regulatory environment for prediction markets while preserving safeguards intended to protect market integrity.
Coinbase concluded by expressing its willingness to continue working with the CFTC as the agency finalizes the rule.
Prediction markets keep gaining momentum
Coinbase’s filing comes as prediction markets receive increasing attention from both regulators and market participants.
The CFTC has been reviewing how event contracts should be evaluated under federal commodities law, while companies operating in the sector have continued to expand their offerings. The outcome of the rulemaking is expected to influence how future prediction market products are listed and reviewed in the United States.
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