The Commodity Futures Trading Commission (CFTC) is urging Congress to step in and regulate the rapidly expanding world of cryptocurrency and election betting. CFTC Chair Rostin Behnam voiced his concerns at the Securities Industry and Financial Markets Association’s annual meeting, expressing the agency’s struggle to effectively police election betting platforms due to their classification as illegal.
Behnam highlighted the challenges posed by platforms like Polymarket and Kalshi, which have gained significant traction, particularly during the recent election cycle. Billions of dollars have been wagered on the outcomes of elections, including the presidential race between Donald Trump and Kamala Harris.
Kalshi, following a successful appeal against a CFTC ban, has resumed accepting bets on congressional elections. Conversely, Polymarket, after receiving a $1.4 million penalty and a cease-and-desist order from the CFTC in January 2022, has maintained an offshore presence, limiting access for U.S. residents.
Polymarket, built on the Polygon network, has also faced criticism regarding potential market manipulation and its influence on public opinion. Renowned investor Mark Cuban expressed skepticism about the platform’s odds, pointing to the potential impact of foreign investment and the legality concerns for U.S. participants. Despite the controversies, Polymarket has secured funding from prominent U.S. tech investors like Peter Thiel.
Behnam’s call for congressional intervention signifies the growing need for clarity and regulation in the evolving landscape of cryptocurrency and election betting. As these platforms continue to gain popularity and influence, the potential implications for market integrity and public perception demand a comprehensive and robust regulatory framework.