Paradigm has stepped up to back Kalshi in its legal battle against the Commodity Futures Trading Commission (CFTC), defending the right to offer prediction markets in the U.S. Congressional elections, and arguing for the critical role such markets play in risk management and information dissemination within the crypto industry.
Legal Battle Brews as Paradigm Supports Kalshi’s Election Prediction Platform Against CFTC
Investment firm Paradigm has thrown its support behind prediction market platform Kalshi in its ongoing legal dispute with the CFTC. The contention arises from the CFTC’s rejection of Kalshi’s proposed market, which would allow participants to speculate on the outcome of U.S. Congressional elections, particularly regarding which party will control each chamber of Congress.
Paradigm submitted an amicus brief last week in favor of Kalshi’s lawsuit against the CFTC. This legal action was initiated after the CFTC disapproved of a prediction market on Kalshi on the outcome of this year’s Congressional elections, critiquing it as a form of wagering that is illegal under state laws. In November, Kalshi challenged the regulatory body, claiming it had overstepped its jurisdiction.
The crux of Paradigm’s argument, as detailed in their Policy Blog and amicus brief, is the belief in the transformative potential of prediction markets for the cryptocurrency industry. These markets, according to Paradigm, offer critical insights and a method for companies to mitigate regulatory risks. This is especially pertinent given the significant influence U.S. Congressional elections have on legislative actions, regulatory appointments, and overall business climate for crypto startups in the United States.
Paradigm emphasizes the utility of such event contracts in providing real-time information to not only market participants but also the general public, enhancing the predictive accuracy regarding electoral outcomes compared to traditional polling methods. The firm argues that enabling contracts on Congressional control aligns with public interest, urging the court to overturn the CFTC’s prohibition.
As both sides present their arguments, the outcome may set a precedent for how similar products are treated by regulators in the future, potentially shaping the intersection of cryptocurrency, prediction markets, and regulatory oversight.
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