Crypto.com’s SVP Steve Humenik Challenges CFTC’s Proposed Ban on Prediction Markets

In a significant development, Steve Humenik, Senior Vice President of Crypto.com, has joined Coinbase in opposing proposed rule change by the Commodity Futures Trading Commission (CFTC). The rule, which could lead to a prohibition on prediction markets and event contracts in the United States, has sparked concerns across the industry.

Humenik’s Stance Against the Proposed Rule

In a detailed letter dated August 8, 2024, Humenik expressed his strong opposition to the CFTC’s proposed regulation. He argued that the rule, as it stands, is overly restrictive and goes beyond the CFTC’s statutory authority. He voiced concerns that the new proposal might undermine the current, well-established process for reviewing and approving event contracts, which is already outlined in the CFTC’s existing regulations.

Humenik urged the CFTC to reconsider its approach, stating, “We urge [the CFTC] not to finalize this proposed rule as written, and to consider withdrawing it altogether.” He highlighted that the Commodity Exchange Act (CEA) already provides a three-step process for evaluating event contracts, which he believes should be adhered to. This process, according to Humenik, ensures that each contract is reviewed on its merits, particularly when determining if it involves an “excluded commodity.”

Humenik also stressed the need for the CFTC to maintain transparency in its decision-making process. He warned against categorically banning entire classes of event contracts without conducting thorough, individualized reviews. Furthermore, he recommended that the CFTC seek clarification from Congress regarding ambiguities in the CEA, particularly those that appear to stem from drafting errors in the statute.

While Humenik supports effective regulation of derivatives markets, he insisted that any changes to the regulation of event contracts should be principles-based and firmly grounded in existing legal frameworks unless explicitly directed otherwise by Congress. His stance aligns with the broader industry view that regulatory changes should not stifle innovation or overreach the authority granted by law.