CFTC Withdraws Event Contracts Ban Proposal, Launches Joint Crypto Rulemaking With SEC

​

The U.S. Commodity Futures Trading Commission (CFTC) has withdrawn a proposal that would have restricted political and sports-related prediction markets, marking a shift in the agency's regulatory stance while simultaneously deepening coordination with the Securities and Exchange Commission (SEC) on digital asset oversight.

In his first public speech as CFTC Chair, Michael Selig said he had instructed agency staff to withdraw the 2024 proposed rule on event contracts, which sought to prohibit political and sports-related contracts, as well as a 2025 staff advisory that warned registrants about offering access to sports-related contracts amid ongoing litigation.

"I have directed CFTC staff to withdraw the 2024 event contracts rule proposal that would prohibit political and sports-related event contracts and the 2025 staff advisory," Selig said, adding that the advisory, intended to flag legal risk, had instead "contributed to uncertainty" in the market.

Reassessment of Prediction Markets

Selig described the move as the beginning of a broader reassessment of the CFTC's approach to prediction markets, which the agency refers to as "event contracts." He noted that such contracts have operated under CFTC jurisdiction for more than 20 years.

According to Selig, staff have been directed to begin drafting a new rulemaking framework aimed at providing clearer standards and greater legal certainty for exchanges and intermediaries. He also instructed the agency to reassess its role in ongoing federal court cases related to jurisdictional disputes and to work with the SEC on a joint interpretation of Title VII definitions to better delineate commodity options, security options, swaps and security-based swaps.

"Project Crypto" With the SEC

Alongside the policy reversal on event contracts, Selig outlined a joint initiative with SEC Chair Paul Atkins known as "Project Crypto." The effort is intended to establish a shared federal framework for digital asset markets and to address regulatory overlaps between the two agencies.

The initiative will focus on developing a common taxonomy for crypto assets, clarifying jurisdictional boundaries, and reducing duplicative compliance requirements that, according to Selig, have contributed to trading activity moving offshore.

Selig echoed Atkins's view that "most crypto assets trading today are not securities" and said staff from both agencies have been asked to consider jointly codifying Atkins's proposed taxonomy as an interim step while Congress works on broader market-structure legislation.

Broader Crypto Market Measures

Beyond prediction markets, Selig said the CFTC will explore rules to expand the use of tokenized collateral, support the onshoring of so-called "true" perpetual futures, and clarify when leveraged retail crypto contracts can qualify for the "actual delivery" exception in off-exchange trading.

He also raised the possibility of creating a new designated contract market category tailored to retail leveraged crypto trading and indicated that the agency will examine potential safe harbors or innovation exemptions for software developers, non-custodial wallet providers, decentralized finance protocols and other on-chain infrastructure participants.

Together, the changes signal a shift toward regulatory coordination and legal clarity across prediction markets and digital assets, as both agencies seek to redefine their roles amid evolving market structures.