The Commodity Futures Trading Commission has proposed expanding the definition of swaps to include certain prediction market trades, potentially reshaping how platforms offer contracts tied to elections, sports, economic data and other real-world events.
The proposal could give the agency broader authority to oversee markets that have grown rapidly among retail traders and institutional investors.
Supporters may view increased oversight as a way to strengthen market integrity, improve transparency and protect participants from manipulation.
Critics are likely to argue that the change could restrict innovation and subject prediction markets to rules designed for complex financial derivatives.
The proposal does not immediately change existing markets. It begins a public comment process, during which exchanges, traders, legal experts and other stakeholders can weigh in before the CFTC decides whether to finalize the rule.