a16z supports the U.S. CFTC and opposes a series of crackdowns by states targeting prediction markets

BlockBeats News, May 2 — Venture capital firm a16z supports the U.S. Commodity Futures Trading Commission (CFTC) in opposing a series of crackdowns by states on prediction markets. On Friday, a16z submitted an 18-page comment letter to the CFTC, stating that the actions taken by state regulators against prediction market platforms—including cease and desist orders and proposed bans—are causing “serious barriers to fair access” for users. In the past month alone, the CFTC has filed a series of lawsuits against Illinois, Arizona, Connecticut, New York, and Wisconsin, claiming that these states are attempting to regulate markets overseen by the federal government, exceeding their jurisdiction.

a16z argues that requiring trading platforms to block U.S. users based on their state of residence conflicts with the CFTC’s rules on market fair access. The firm wrote, “Being forced to deny fair access to users in states seeking licenses or banning certain event contracts could severely restrict available liquidity.” CFTC Chairman Mike Selig asserts that event contracts in prediction markets are considered swaps and fall under the CFTC’s “exclusive jurisdiction.” State regulators and state attorneys general counter that platforms like Kalshi and Polymarket offer unlicensed gambling products.

a16z also discusses the utility of prediction markets, claiming their pricing mechanisms are a “unique form of price discovery” that helps “reveal the probabilities of uncertain events.” The firm further advocates that blockchain-based prediction markets are more transparent than traditional platforms, stating that “on-chain transaction auditability” makes it easier for participants and regulators to oversee. In April, prediction markets Polymarket and Kalshi collectively surpassed $150 billion in trading volume.