A lawyer testifying before a House subcommittee said the CLARITY Act could give the Commodity Futures Trading Commission the regulatory authority it needs to oversee the “explosive growth of prediction markets,” according to reporting by Cointelegraph.
The legislation, formally known as the Commodity Legislation and Regulatory Improvement Act, would clarify the CFTC’s jurisdiction over digital asset markets — including the rapidly expanding prediction market sector. During a House Agriculture Subcommittee hearing, attorney Neeraj Pearl testified that the bill’s framework could resolve the regulatory ambiguity that has allowed prediction markets to operate in a gray area.
Prediction markets have seen explosive growth recently, with platforms like Polymarket drawing millions of users betting on everything from election outcomes to sports results. The CFTC has historically treated some prediction markets as illegal gambling operations, but the CLARITY Act could provide a regulatory pathway for them to operate legally under CFTC oversight.
Pearl testified that the legislation would give the CFTC “the tools it needs” to distinguish between legitimate prediction markets and illegal gambling operations. The bill has garnered bipartisan support in the House Agriculture Committee, though its prospects in the full House and Senate remain uncertain.
Industry observers say regulatory clarity could unlock institutional participation in prediction markets, which have largely been driven by retail crypto users. The CFTC has previously taken enforcement action against platforms like Polymarket, resulting in a $1.4 million settlement in 2022.
Source: Cointelegraph
