The Hyperliquid Policy Center (HPC) and Multicoin Capital have called on the US Commodity Futures Trading Commission (CFTC) to refine its proposed framework for prediction markets, arguing that clearer rules would encourage innovation while providing greater legal certainty for market participants.
In a joint comment submitted on 27 July, the two organisations backed the regulator’s proposal but recommended additional guidance on contract settlement standards and greater transparency in the review process.
Industry Supports Federal Oversight
The submission responds to the CFTC’s proposal, “Prediction Markets; Public Interest Determinations,” released in June.
The proposal would amend Regulation 40.11, creating a 90 day review process for event contracts linked to subjects such as gaming, war, terrorism, assassination, and other activities outlined in the Commodity Exchange Act.
HPC and Multicoin described the framework as clear and thoughtfully designed, while reiterating that prediction markets should remain under the CFTC’s exclusive federal authority.
They also warned that allowing individual states to regulate the sector independently would create inconsistent rules across the country, fragmenting the national derivatives market and increasing compliance burdens for exchanges.
Settlement Should Determine Regulatory Treatment
A key recommendation in the letter focuses on how regulators interpret the word “involve” in the Commodity Exchange Act.
Under current law, the CFTC can review and prohibit contracts involving certain activities if they are deemed contrary to the public interest.
HPC and Multicoin argue that regulators should evaluate contracts based on the event that determines settlement rather than the act of trading itself.
In their view, a contract should only fall within the stricter regulatory framework when its settlement depends directly on unlawful or prohibited activity, not simply because purchasing the contract resembles a wager.
The organisations also encouraged the CFTC to publish additional examples covering more complex scenarios, such as contracts with multiple settlement outcomes or products that reference sensitive events only indirectly. They believe clearer guidance would help developers and exchanges assess regulatory risks before launching new products.
Greater Transparency Could Benefit the Industry
The filing also urges the CFTC to increase transparency after completing reviews under Regulation 40.11.
The current proposal requires the agency to publish written explanations when it blocks a contract and to explain how each decision aligns with previous rulings.
However, HPC and Multicoin argue that approvals are just as valuable as rejections when it comes to understanding regulatory boundaries.
Without public explanations for approved contracts, they contend that other platforms may be forced to repeat the same legal analysis, seek additional regulatory guidance, or abandon products that might ultimately comply with existing rules.
Industry Awaits the CFTC’s Response
Whether the CFTC incorporates these recommendations remains to be seen.
If adopted, the proposed changes could provide clearer standards for prediction markets while signalling that US regulators are willing to work closely with industry participants to develop a consistent and transparent regulatory framework for on chain event contracts.#crypto#cryptonewshttps://coinsignals.net https://t.me/coinsignalpublic
