TechFlow News, May 2 — According to The Block, venture capital firm a16z submitted an 18-page comment letter to the U.S. Commodity Futures Trading Commission (CFTC) on Friday, supporting the CFTC’s position and opposing state-level restrictions on prediction markets. a16z stated that cease-and-desist orders and proposed bans issued by state regulators against prediction market platforms are creating “serious barriers to fair access” for users and could severely constrain available liquidity.
Over the past month, the CFTC has filed multiple lawsuits against Illinois, Arizona, Connecticut, New York, and Wisconsin, asserting that these states are overstepping their authority by regulating markets falling under federal jurisdiction. CFTC Chair Mike Selig previously stated that event contracts on prediction markets qualify as swap products and thus fall under the CFTC’s “exclusive jurisdiction.”
a16z also noted that prediction markets employ a “distinct price-discovery mechanism,” and on-chain prediction markets are more transparent than traditional platforms due to the auditability of their trades. In April this year, Polymarket and Kalshi collectively surpassed $150 billion in cumulative historical trading volume.
