CFTC Withdraws Proposal Banning Event Contracts, Boosts Legal Clarity for Crypto Markets

The U.S. Commodity Futures Trading Commission (CFTC) has scrapped a controversial 2024 proposal that sought to prohibit event contracts tied to sports, politics, and war. Newly confirmed Chair Mike Selig called the measure "contrary to the public interest," signaling a shift toward fostering innovation in derivatives markets.

The withdrawn proposal, initially framed as a risk-management tool ahead of the 2024 election, reflected the previous administration's regulatory stance. Selig emphasized the CFTC will now develop rules grounded in a "clear and logical" interpretation of the Commodity Exchange Act—a MOVE likely to benefit crypto-linked prediction markets.

Parallel to this decision, the agency eliminated advisory guidance that created legal uncertainty for event contracts. This dual action removes key barriers for both traditional and cryptocurrency-based derivatives, aligning with the CFTC's mandate to promote responsible market innovation.