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Gemini, the cryptocurrency exchange co-founded by Cameron Winklevoss, has urged U.S. regulators to reconsider a proposed rule that would ban all event contracts on decentralized prediction markets.
In an August 8 letter to Christopher Kirkpatrick, Secretary of the U.S. Commodity Futures Trading Commission (CFTC), Gemini highlighted the potential negative impact this rule could have on prediction markets, including those used for forecasting elections.
Winklevoss Advocates for Crypto Prediction Markets
Cameron Winklevoss expressed strong opposition to the proposed rule in a social media post on August 9. He argued that cryptocurrency prediction platforms, such as Polymarket, provide a level of transparency and integrity unmatched by traditional methods.
“The CFTC should withdraw its Proposed Rule on event contracts, which would ban all event contracts in the U.S., including those traded on Polymarket, the world’s largest prediction market,” Winklevoss wrote. “Unlike polls or expert opinions, these platforms require participants to invest their own money, demonstrating real commitment.”
Winklevoss emphasized that decentralized prediction markets represent a significant innovation with genuine public utility. He noted that the proof-of-stake mechanisms employed by these platforms contribute to their credibility.
Coinbase Also Opposes the Rule
Coinbase has also voiced concerns about the proposed regulation. Paul Grewal, Coinbase’s Chief Legal Officer, criticized the proposal, stating that it fails to acknowledge the public benefits of prediction markets.
“We urge the CFTC to withdraw this proposal and collaborate with academic, industry, and policy stakeholders to develop a more balanced approach that fosters innovation while safeguarding public interests,” Grewal said.
Political Concerns About Election Integrity
The proposed rule comes amid growing political concerns. On August 5, five U.S. senators and three representatives called for a ban on betting related to the 2024 presidential election, citing fears that such markets could influence the outcome and undermine public trust in democracy.
The surge in activity on prediction markets, particularly regarding the U.S. presidential election, has been significant. Polymarket saw record-breaking volumes in early July, surpassing previous highs. According to Dune Analytics, Polymarket recorded $387.03 million in volume for July, significantly up from $111.5 million in June.
The debate over this proposed rule highlights the tension between regulation and innovation in the evolving field of cryptocurrency and prediction markets.
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