Hyperliquid and Multicoin push for federal oversight of prediction markets

The joint filing, submitted on July 27, argues that written federal standards are essential for operators to design compliant event contracts. By moving away from subjective staff interpretations, the groups contend that the industry can avoid the policy volatility that often plagues shifting administrations. The CFTC’s proposed amendments to Regulation 40.11 seek to establish a three-step test to determine if a product—ranging from political outcomes to economic indicators—conflicts with the public interest or involves prohibited activities like assassination or terrorism.

Central to the proposal is a shift toward analyzing the specific settlement conditions of a contract rather than the act of trading itself. The firms suggest that if the CFTC adopts this framework, it should commit to publishing its reasoning for both approvals and rejections. This transparency would provide a roadmap for future filings, particularly as the regulator cracks down on broad, template-style self-certifications. While the industry pushes for the CFTC to remain the sole federal authority, the legal landscape remains fractured. State-level challenges regarding gambling laws continue to clash with federal derivatives rules, leaving platforms like Kalshi and Polymarket navigating a complex web of court battles. Even with a finalized CFTC rule, the path for decentralized, non-custodial markets to operate legally within the United States remains an open question.