The Commodity Futures Trading Commission’s first Innovation Advisory Committee meeting convened Thursday to dig into the latest in prediction markets regulation, with the most heated exchanges centered on self-certification and a rising product type known as “mention markets.”
CFTC Chairman Michael Selig — the only official on the agency’s typically five-member commission board — said the committee’s role is to feed input into CFTC decisions that would strengthen market regulation. The roughly three-hour meeting drew more than 30 members, including top brass from Robinhood, Nasdaq, CME, plus Polymarket CEO and founder Shayne Coplan and Kalshi co-founder Luana Lopes Lara.
The group first touched on the regulatory landscape for crypto and artificial intelligence, but discussions grew most impassioned around prediction markets. Key concerns included self-certification for event contracts and “mention markets” — contracts where traders speculate on whether certain words will be uttered during a speech or earnings call — and their vulnerability to manipulation. Members also mapped out a regulatory roadmap for the sector.
Self-certification clash
Terry Duffy, chair and CEO of CME Group, took one of the most aggressive stances on how prediction markets should operate. Under the Commodity Exchange Act, prediction market platforms can propose, file and certify event contracts without prior CFTC approval — a process known as self-certification. Duffy argued that this fast-track method, which lets platforms quickly post new contracts, can leave markets exposed to manipulation.
“There’s been 2,500 self-certifications since this administration was taking office in January of 2025, of which none have been opposed,” Duffy said. “There’s been a lot of self-certifications around products that are in violation of core principles.”
Lopes Lara pushed back, asking Duffy whether CME had ever faced insider trading issues. “If you’d like to have a debate, I’m happy to have a debate with you,” he replied. She voiced support for self-certification, arguing it’s essential for time-sensitive events. “We need to be able to have these markets fast for our users,” she said.
Duffy also pointed to recent insider trading cases on prediction markets, including the April arrest of a U.S. soldier following bets on the capture of Venezuelan leader Nicolás Maduro, and a teleprompter operator now facing federal investigation over bets tied to statements by President Trump. He brought up insider cases related to Kalshi’s mention markets, a concern shared by Robinhood co-founder and CEO Vlad Tenev. Tenev stopped short of calling for an outright ban on mention markets but urged the agency to scrutinize them closely.
Three-part regulatory roadmap
In his introductory speech, Selig laid out a three-part roadmap for prediction markets. First, he addressed the agency’s June proposal to amend rules on which event contracts the CFTC could prohibit, noting the term “gaming” needs a definition and public interest criteria should be spelled out. “Contracts are at the risk of rejection based on arbitrary whims of political biases, and DCMs [designated contract markets] have been left operating in the dark,” he said. Prediction markets operate as DCMs.
The second step involves a proposal to modernize reporting frameworks for fully collateralized event contracts. The third step calls for more amendments on how DCMs should list event contracts, paired with stronger consumer protection requirements.
Thursday’s meeting followed a White House gathering Wednesday that included crypto leaders, Selig, and SEC Chairman Paul Atkins. There, Selig criticized New York Attorney General Letitia James, whose state sued Kalshi in July, calling the platform an “illegal gambling operator.” The CFTC responded Aug. 11 with emergency authority, ordering Kalshi to continue offering its event contracts in the state.
“We’ve also protected federally regulated prediction markets from rogue state attorneys general like Letitia James, who seek to nullify federal law and drive these markets offshore to unregulated and foreign venues,” Selig said Wednesday.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/20/cftcs-committee-meeting-addresses-prediction-market-risks.html
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