President Donald Trump has appointed a new acting chair of the Commodity Futures Trading Commission (CFTC) who has voiced their stance on political event contracts.
Trump has appointed Caroline Pham as acting chair of the CFTC after she was confirmed by the five members of the CFTC earlier this week. Pham is taking over for Rostin Behnam following his resignation with the Senate set to confirm a permanent chair.
Pham previously served as a Managing Director at Citigroup before joining the CFTC. Before being promoted to acting chair, Pham served as a CFTC commissioner for two years.
Pham’s stance on political event contracts
The CFTC’s new chair has assumed her role amid the growth of political event contracts.
Prior to being appointed as acting chair, Pham voiced her desire for the CFTC to establish a regulatory framework for prediction markets like Kalshi to offer contracts. Pham believes the CFTC can regulate contracts as they are not considered gaming, which is under states.
“The CFTC has a role in regulating event contracts as a market regulator, but it is essential that the CFTC does not encroach upon the prerogatives of states,” said Pham in an opinion. “An appropriate event contracts proposal would have struck a balance between federal oversight and state autonomy by focusing on the CFTC’s core mandate of promoting market stability and protecting market participants from fraud and abusive practices.”
Under Pham, the CFTC will continue to discuss the regulation of political event contracts due to a contentious legal battle with one of the world’s largest providers of contracts.
The CFTC takes part in oral argument
Last week, the U.S. Court of Appeals for the District of Columbia Circuit held an oral argument with Kalshi and the CFTC regarding the legality of political event contracts.
The oral argument comes after the CFTC blocked Kalshi from offering its political contracts in 2023 due to state game laws prohibiting wagering on political events. Kalshi sued the CFTC for improper authority in response to the blockage leading to a district court ruling. The ruling allowed Kalshi to offer its contracts ahead of the 2024 presidential election.
The Court of Appeals for the D.C. Circuit upheld the lower court’s ruling allowing the contracts. Kalshi reported strong interest in its presidential contracts despite the CFTC’s efforts to prevent the exchange and its competitors from allowing political contracts.
Between October 2024 and November 2024, Kalshi accepted $250 million in contracts on the presidential election. Fintech giant Robinhood also offered political contracts.
Kalshi and Robinhood combined for more than $300 million in election contracts.
The CFTC sends a message
The CFTC is also taking exception to Crypto.com’s event contracts after notifying the company on Jan. 14 that it will initiate a review of two sports-related event contracts.
The CFTC, in accordance with regulations, has requested that Crypto.com suspend any listing and trading of the two contracts during the review period, which lasts 90 days.
Crypto.com is facing potential shuttering of its sports event contracts.
