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CFTC staff urges exchanges to tighten safeguards for speech markets
The Sept. 22 advisory says contracts tied to named individuals, their words, appearance, or interactions carry heightened manipulation risk.
CFTC staff have issued a Sept. 22 advisory focused on prediction markets tied to political speech, urging exchanges to provide stronger, contract-specific explanations for safeguards to prevent manipulation. According to CryptoSlate, the CFTC Division of Market Oversight says contracts tied to a named person’s words, appearance, or interaction face heightened risk under the existing framework that regulated contracts not be readily susceptible to manipulation.
The advisory is described as a staff view rather than a binding rule, and it does not prohibit speech markets outright. CryptoSlate reports that the CFTC asks exchanges to address whether the outcome-determiner has independent obligations that deter gaming, whether third parties could pressure or induce that person, and whether outsiders can verify outcomes under substantial public scrutiny, including whether the decisive word or act has real significance in its setting.
CFTC staff also say exchanges cannot rely on a speaker’s professional obligations in place of exchange controls, and that filings should explain measures used to identify people who control an outcome or have privileged access. CryptoSlate adds that staff provided four non-exhaustive questions and noted that trading restrictions, surveillance, and other controls should be suited to the specific risks of each contract.
The story also notes that Kalshi continued to list speech markets after the advisory. CryptoSlate cites examples from Kalshi pages covering Donald Trump’s remarks at Xi Jinping’s state arrival, Treasury Secretary Scott Bessent’s television interview, and BlackBerry’s next earnings call, with reported volumes at the time of a Sept. 23 check. It also describes how one Trump-linked contract would determine outcomes using a live video or stream, with a fallback to official transcripts if exchange employees cannot reach consensus from video.