The U.S. Commodity Futures Trading Commission, which claims to be the primary regulator of prediction markets firms run by companies including Kalshi, Coinbase, Polymarket and Crypto.com, issued an advisory Friday reminding companies that they should not skimp on wide-ranging contract certifications meant to encompass a wide range of events.
The agency said “broad model type certifications should not be submitted”, marking the second time in recent months that the regulator has had to warn against overly generalized submissions.
Many “designated contract markets” regulated by the CFTC “continue to self-certify event contracts” (in other words, prediction market contracts) as general models “without providing the terms and conditions of each proposed permutation or a concise explanation and analysis regarding the product terms and conditions, the underlying product, and product compliance,” the agency said.
The regulator said circumventing the process can harm its ability to determine whether the company “has provided all required information, explanations and analyses” and has “adequately evaluated the settlement methodology, data sources and compliance with the fundamental principles of all permutations of the contract.”
