CFTC vs. States: A Derivative Drama Unfolds

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In a world where the line between federal might and state whim is as thin as a poorly hedged bet, the CFTC, under the watchful gaze of Chair Michael Selig, finds itself entangled in a most peculiar struggle.

Behold the CFTC, that steadfast guardian of derivatives, now brandishing an amicus brief like a sword in the age-old battle between central authority and local autonomy. One might call it the “War of the Wagers,” though few would wager on a happy ending.

The tension? A clash of jurisdictions, as if the CFTC and state regulators were two old friends at a dinner party, both reaching for the last potato salad. Selig, with the solemnity of a man who has seen too many spreadsheets, insists the CFTC’s dominion over prediction markets is as sacred as Sunday morning.

An Amicus Brief: The CFTC’s Playbook

Selig, that indefatigable champion of federal oversight, declared the filing of an amicus brief a necessary act of defiance against what he calls an “onslaught of state-led litigation.” Imagine, if you will, a bureaucrat in a three-piece suit, clutching a brief like a knight his holy relic, while states like Massachusetts loom like dragons hoarding their own gambling laws.

“Prediction markets,” Selig proclaimed in a video that could only be described as a TED Talk for regulators, “are not new. The CFTC has presided over them for two decades, like a doting parent ensuring their child never bets on a presidential election.”

I have some big news to announce…

– Mike Selig (@ChairmanSelig)

He further mused that these markets, which allow one to hedge against the chaos of life-or perhaps the chaos of politics-are vital to the “assessment of public information.” A noble sentiment, unless you’re a state attorney general who’d rather you just bet on horses, thank you very much.

States, Platforms, and the Great Legal Joust

Enter the states, with their own briefs and bravado, challenging platforms such as Coinbase, Crypto.com, Kalshi, and Polymarket. The question before the court? Whether these contracts are gambling (state territory) or derivatives (federal territory). It’s a distinction as clear as mud, and twice as sticky.

Polymarket, in a recent lawsuit, likened the CFTC to a federal shepherd, while states are merely feral dogs. “Congress gave the CFTC the keys,” they argued, “not the local poodle.” A metaphor as poetic as it is legally dubious.

Today, we filed a lawsuit in federal court against Massachusetts. Congress gave the CFTC, not states, exclusive authority over event contracts.

These are national markets with critical questions that must be resolved in federal court 🧵

– Neal Kumar (@HereComesKumar)

Selig, ever the advocate, penned an op-ed in the Wall Street Journal, accusing states of “encroaching” on his domain. One might almost feel sympathy for the poor souls caught in this crossfire-lawmakers, market participants, and perhaps even the occasional unsuspecting investor.

Related Reading: CFTC Chair Michael Selig Signals Lighter Crypto Oversight Under ‘Future Proof’ Plan

The Senate’s Watchful Eye and a Bill in the Balancing Act

A coalition of 23 senators, perhaps sensing a legislative drama brewing, urged Selig to “abstain from intervening” in pending cases. They warned of a regulatory “shift” that could ignite conflicts with state and tribal authorities. One imagines them sipping tea and muttering, “This is getting complicated,” as they shuffle through yet another stack of legal documents.

Meanwhile, the House passed the CLARITY Act, a bill so named it might as well be a promise of clarity in a world of fog. The Senate Agriculture Committee advanced it in January, but whether the full Senate will take up the measure remains as uncertain as the outcome of a prediction market itself.

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2026-02-18 09:24