CFTC moves to regulate prediction markets; stricter controls for event contracts

The CFTC on March 12 issued guidance treating prediction markets as a regulated financial asset class and told designated contract markets (DCMs) to comply with the Commodity Exchange Act for event-based contracts. Chair Michael S. Selig said the era of “no rules” is over and the agency opened an Advanced Notice of Proposed Rulemaking (ANPRM) with a 45‑day public comment period. The guidance requires exchanges to strengthen anti‑manipulation surveillance, ensure settlement-data integrity, coordinate with sports bodies on event contracts, and apply higher scrutiny to narrowly defined or ethically sensitive markets (eg, injury, death, war). The agency signaled potential enforcement and launched a formal rulemaking that could result in binding requirements. The move responds to rapid market growth — Kalshi and Polymarket reportedly hit about $18.6 billion combined monthly volume in Feb 2026, with March midmonth already over $8 billion — and rising political and institutional ties. For crypto traders, the guidance increases compliance expectations for on‑chain and centralized prediction platforms, raises the chance that high‑risk or narrowly defined contracts will be delisted or face stricter review, and should reduce manipulation risk while raising platform costs and operational friction. Public comments over 45 days may shape final rules and timelines.