In the latest clash between U.S. regulators and cryptocurrency prediction markets, the Commodity Futures Trading Commission (CFTC) has reportedly subpoenaed Coinbase, demanding that the exchange hand over customer data related to the decentralized betting platform Polymarket.
According to a source familiar with the matter, Coinbase has begun warning affected users that their information may be shared with the derivatives regulator to comply with the request. The move comes just days before the CFTC’s leadership is set to change hands as President-elect Donald Trump takes office on January 20.
Ongoing Legal Battle Over Crypto Prediction Markets
The CFTC’s pursuit of Polymarket customer data is the latest development in the agency’s drawn-out legal dispute with cryptocurrency-based prediction market platforms. In a case that could have significant implications for the future of decentralized betting in the U.S., the regulator is appealing a federal court ruling that allowed competitor Kalshi to offer election-based contracts.
Where necessary, we will seek to narrow requests that are overly broad or vague in order to provide a more appropriately tailored response, and in some cases we object to producing any information at all.
Coinbase spokesperson
Uncertainty Over Regulatory Jurisdiction
The clash highlights the ongoing ambiguity surrounding U.S. regulators’ authority over decentralized prediction markets and cryptocurrency derivatives trading. While the CFTC argues such platforms fall under its purview, the crypto industry has pushed back, contending that only Congress has the power to police betting on elections and other real-world events.
- Key question: Do crypto prediction markets qualify as commodity derivatives subject to CFTC oversight?
- Industry view: Decentralized betting platforms exist in a legal gray area outside CFTC jurisdiction.
Incoming Republican CFTC Leadership
With the impending leadership change at the CFTC, it remains to be seen whether the agency will maintain its aggressive stance toward cryptocurrency prediction markets under new Republican leadership. Current commissioner Caroline Pham and former commissioner Brian Quintenz have been floated as potential candidates to replace outgoing Chairman Rostin Behnam.
As the battle over customer data unfolds, the crypto industry and legal experts will be closely monitoring any shifts in the CFTC’s approach as it transitions to Republican control. The outcome could provide much-needed clarity on the regulatory status of prediction markets and set important precedents for the broader cryptocurrency derivatives landscape in the United States.
