CFTC Regulatory Shift Could Open Greenfield Growth for Coinbase Prediction Markets: Analyst

The newly appointed Chairman of the U.S. Commodity Futures Trading Commission (CFTC), Michael Selig, has signaled a major shift toward clearer federal oversight of crypto-linked prediction markets, according to a report from Clear Street analyst Owen Lau.

In his first public remarks as CFTC Chair, Selig outlines a vision of closer coordination with the Securities and Exchange Commission (SEC) to unlock innovation across blockchain-based markets.

Speaking at a joint SEC–CFTC Harmonization Event, Selig said the agency would prioritize a unified federal approach rather than pursuing parallel regulatory initiatives.

“The objective is to implement clear and principled rules of the road for crypto,” Lau wrote.

“Project Crypto” Introduced Ahead of Congressional Action

Selig’s comments come as lawmakers continue to debate broader market structure legislation, which would determine whether digital tokens fall under securities or commodities regulation and clarify jurisdictional boundaries between the SEC and the CFTC.

Clear Street notes that the chairman’s initiative — referred to as “Project Crypto” — arrives even before Congress has finalized agreement on a market structure bill.

Lau said the move also outshines the Senate Agriculture Committee’s advancement of the “Digital Commodity Intermediaries Act,” which passed with partisan backing on the same day.

“This is the type of leadership the industry has been seeking for years,” Lau said.

CFTC Moves to Withdraw Restrictions on Event Contracts

More significantly, Selig indicated the CFTC is prepared to take greater control over the regulatory uncertainty surrounding prediction markets, a sector that has faced mounting litigation and unclear oversight.

Lau highlighted that Selig directed agency staff to withdraw the 2024 event contracts rule proposal, which would have banned political- and sports-related event contracts. He also ordered the withdrawal of a 2025 staff advisory cautioning firms against offering sports-related contracts amid ongoing court disputes.

Clear Street believes Selig recognizes that the previous hands-off posture has contributed to legal uncertainty rather than market stability.

Drafting New Rules and Defending CFTC Jurisdiction

To promote innovation and competition, Selig instructed staff to draft a new rulemaking framework for event contracts and reassess the agency’s participation in court matters currently pending.

Lau said it is increasingly likely the CFTC will defend its exclusive jurisdiction over commodity derivatives, including sports-related event contracts, when jurisdictional disputes arise.

“These actions could strengthen the case that prediction market platforms have been making to the courts,” Lau wrote.

Coinbase and Circle Seen as Potential Beneficiaries

Clear Street added that companies such as Coinbase (COIN) and Circle (CRCL) could benefit from the regulatory developments, calling prediction markets a “greenfield opportunity.”

Coinbase recently launched prediction markets across all 50 U.S. states, while Circle’s USDC stablecoin is widely used on crypto-native platforms such as Polymarket.

While uncertainty remains over whether courts will uphold future CFTC rulemaking, Lau said the shift represents a positive development for the growing prediction market ecosystem.