So does the cop on the beat favor margin trading for events contracts?

Well, the margin trading issue is interesting in that exchanges in the prediction space typically do not have intermediation with a broker or an FCM, as they're called in our markets.

Cauchy is one of the exchanges that has allowed for direct-to-exchange trading.

And what they've seen or what they're telling us they're seeing is an interest in institutional participants that want to come in and trade on margin.

So this proposal, we're, of course, evaluating it.

It's not one that we've approved to date.

But the proposal would allow for institutional traders and certain traders that meet the Very stringent eligibility criteria that we're evaluating to trade on some of these event contracts in the Kaoshi market.

And you've launched some investigations and some action, but do you have enough resources to do it?

How are you thinking about policing against insider trading when it comes to political event contracts, and in particular, should we expect the CFTC to release any specific guidance ahead of the midterms?

Absolutely.

We're utilizing all of our authorities to police these markets.

They are derivatives markets within our exclusive jurisdiction.

We take that responsibility very seriously.

There's two things that we're looking for.

One is insider trading, as you mentioned.

What lessons have you learned more broadly this year that you're applying going forward?

Thanks to your leadership, the era of political lawfare, de-banking, and regulation by enforcement is over.

over.Innovators like the people in this room are welcome to the White House, not railroaded to the Big House.

And the new frontier of finance is being built right here in the United States of America.

From day one, this president has been clear.

America will not fall behind and allow other countries to take its place as the greatest country on Earth to build a new technology, operate a business, and invest for the future.

The world will run on the backbone of American technology.

Under President Trump's leadership, we've codified the Genius Act, established a strategic Bitcoin reserve, drawn a clear line in the sand between crypto securities and commodities, launched the first US crypto perpetual, and protected the rights of software developers.

That's true

Were you seeing outright like blatant lies being put out by the media or?

No, I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for for special access programs and and what we call use apps which is unspecified special access programs or unacknowledged special access programs and those military contracts are all having to do with alien rated related technologies but i say that coming back to your question of what were you seeing in the media while you're flying combat missions.

Exactly.

Were you seeing outright like blatant lies being put out by the media or?

No, I don't think it's like that.

I don't, I mean...

The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

Yeah.

Um, d- does the approval of the perpetuals futures contract for crypto, does that m- pave the way for other asset classes? Is that something that you are considering?

We're evaluating it.

I've said since day one that we're going to look at this on an asset by asset basis.

It's not one size fits all.

There are assets that work for perpetuals, and we were very clear coming out with an order on this point.

Uh, we put out a, a, a kind of a rule essentially or interpretation on, uh, prediction markets or perpetual contracts rather, as well as 24/7 markets, and we were very clear in that interpretation that this is not one size fits all.

We will look at each asset individually, and some products may work, and others may not.

I mean, does that sort of give you a window into the sorts of products that could actually be appropriate?

Does this change the nature of how the CFTC thinks about regulation in this space when, uh, some of these platforms can just, you know, open, so open source their, their guts and show the world exactly how they operate? How does that change your job, if at all?

Well, Bitcoin and blockchain technology really came about on the heels of the financial crisis, and financial crisis, in large part, was this issue of a lack of transparency in our markets because they were super opaque.

We now have a number of forced, uh, reporting and forced transparency initiatives through our regulations as a result of Dodd-Frank and, and regulations thereunder.

But blockchain technology solves a lot of that using technology instead of kind of the, the brute force of, of the regulator.

And so I, I am very excited about that.

I think that blockchain offers a ton of benefits for our traditional markets and for some of these new markets that we're seeing on the frontier, things like prediction markets, things like new crypto asset products and perpetuals.

Um, I expect to, to see this technology be used in a very broad, uh, way across our markets, whether it's in securities or commodity derivatives or the next, uh, new thing in our market.

[laughs] Yeah.

Uh, you know, what would you expect to be required of them? How could a DeFi application come onshore and operate legally, uh, in the US under, under CFTC oversight?

Well, DeFi is, is sort of this buzzword.

We think about on-chain markets, so there's a wide range of on-chain applications and software tools from Uniswap, things where you're swapping assets back and forth, to lending protocols like Aave, uh, to some of these perpetuals protocols, things like Hyperliquid that we're seeing in the markets.

We're evaluating all of that.

We're interested in it.

We believe in on-chain markets.

We believe in the technology.

Uh, you know, what role do you actually think the prediction markets serve in both price discovery and information aggregation? A- and do you think they replace potentially traditional polling and forecasting?

Were you seeing outright like blatant lies being put out by the media or? No,

I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for for special access programs and and what we call use apps which is unspecified special access programs or unacknowledged special access programs and those military contracts are all having to do with alien rated related technologies but i say that coming back to your question of what were you seeing in the media while you're flying combat missions.

Yeah.

Were you seeing outright like blatant lies being put out by the media or? No,

I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for for special access programs and and what we call use apps which is unspecified special access programs or unacknowledged special access programs and those military contracts are all having to do with alien rated related technologies but i say that coming back to your question of what were you seeing in the media while you're flying combat missions.

Yeah.

Uh, tell us why that's a position worth fighting for.

Well, Congress was very clear when they drafted the Commodity Exchange Act.

The CFTC is the exclusive regulator when it comes to commodity derivatives, and the definition of commodity is extraordinarily broad.

It covers everything except two things that were expressly carved out, onions and motion picture box office receipts.

So unless, uh, you're looking at onion futures on, uh, one of these exchanges, we regulate it.

And so, um, what I saw coming into office, that the states were bringing these actions against our registered exchanges, really attempting to nullify federal law, and of course, we've got a commerce clause, we have a federal framework for our markets, and that's there for a reason, because these markets cross state lines.

You've got people trading across the country, um, and you need a federal regulator for that.

So I did wanna ask about the, the lawsuits, but, uh, what is the distinction between a sports wager and a sports event contract?

Were you seeing outright like blatant lies being put out by the media or? No,

I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for for special access programs and and what we call use apps which is unspecified special access programs or unacknowledged special access programs and those military contracts are all having to do with alien rated related technologies but i say that coming back to your question of what were you seeing in the media while you're flying combat missions.

Yeah.

And who was in the agency, who was forced out of the agency, and sort of how you think that has or hasn't changed the fundamental sort of philosophy of what the agency does.

Mm-hmm.

Well, a lot of what was, uh, recounted in that, uh, New York Times article was before my tenure.

Of course, I've only been in the seat for about over 100 days now, um, and, and a lot of this was the previous leadership.

But I will say that a lot of what happened under the Biden administration was this regulation by enforcement, was this politicization of the agency, and we're trying to get back to a baseline.

We're trying to make sure that the agency does its job of regulating the markets and nothing else, nothing political.

We're done with the law fare, we're done with pursuing certain industries or certain types of politically, uh, you know, involved people.

Do, do you have a structure in your mind that, that we're gonna eventually arrive at? Uh, I don't envy you.

Were you seeing outright like blatant lies being put out by the media or? No,

I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for special access programs and what we call USAPs, which is unspecified special access programs or unacknowledged special access programs.

Yeah.

Were you seeing outright like blatant lies being put out by the media or?

No, I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for special access programs and what we call USAPs, which is unspecified special access programs or unacknowledged special access programs.

Yeah.

For someone like myself, maybe, or who is a crypto native but doesn't know much about the traditional financial system, let alone regulators, what does the CFTC actually do? How would you explain that to to me.

The Commodity Futures Trading Commission was formed in the 70s, and it was formed to be the core and exclusive regulator of our derivatives markets when it comes to derivatives on commodities.

And commodity is actually very broadly defined in the statute.

So it's not what you'd traditionally think of as commodities.

It does include things like grain, wheat, corn, pork bellies, oil, of course, all the kind of traditional commodities.

But it also includes things like crypto assets.

It includes things like predictions on different events.

And I was wondering if regulators in the US feel any push or they feel the need to stay competitive with other jurisdictions, whether it's Europe or places in Asia?

Were you seeing outright like blatant lies being put out by the media or? No,

I don't think it's like that.

I don't, I mean- The one thing I will say is it feels directed from the very top so that it's not necessarily, I would say it's not even necessarily the strategy of the U.S. government.

And I think you guys know that I'm a firm believer that there's a cabal, a small group of individuals that are above all governments that literally run the planet.

And they can manipulate any government, including ours.

They have participants within our government that get paid well to keep their mouths shut, and they hand out military contracts.

worldwide for for special access programs and and what we call use apps which is unspecified special access programs or unacknowledged special access programs and those military contracts are all having to do with alien rated related technologies but i say that coming back to your question of what were you seeing in the media while you're flying combat missions.

Yeah.

Why is it beneficial to the American economy and the global economy to have markets such as these?

Well, I'm a free market regulator, and I do believe that markets always find a way.

It's important that we foster those markets, create guardrails and regulations around them here in the U.S. because if they don't develop here in the United States, they will develop offshore.

And that's really what we saw under the last administration, where there was a concerted effort to regulate by enforcement, drive these platforms offshore, and that resulted in a loss of innovation in the United States and a loss of jobs, uh, here in the country.

And so what we're doing, and the reason we think these markets are important, is because they create a lot of important information about, for example, elections.

We saw that the prediction markets were much more accurate in twenty twenty-four than some of the polling.

We also see with a lot of the hoaxes and the fake news that m-media can create many types of stories, but the markets are a real check on that.

What do you see happening there?

But Mike and I are setting out to change that, and I'll let you, uh, go forth on that one, Mike.

Absolutely.

The, the two agencies have unfortunately rarely worked well together, and what we're really, uh, moving, uh, forward in a new direction with our harmonization efforts.

We have a memorandum of understanding that the two agencies are working on hammering out and getting in place that will allow us to share information, coordinate on specific issues, and make sure that we don't have this turf battle between the two agencies going forward.

And part of that starts, of course, at the top.

Chairman Atkins and I work very closely together to make sure that we're coordinated on policy, but also at the staff level.

So when exchanges and brokers and market participants are coming in to register or to offer a new product, we need to make sure that there's not this fighting over where they're supposed to be registered and what they're able to offer.

I just want to think out loud.

Why is betting on sports prediction market and not gambling?

Well, we've got all sorts of different products out there.

You start with insurance, you have securities, you have derivatives, and yes, there's gambling at the state level.

They're all structured differently.

These are different activities, different products.

I can design an insurance contract that looks a lot like a derivatives contract.

but there's different economic variables that are at play and the way that it's structured is documented differently, all of that.

How do you apply that minimum effective dose to geopolitical risk bets that seem to quickly devolve into death markets or death bets?