In the first months of Commodity Futures Trading Commission (CFTC) Chair Mike Selig’s tenure, the agency published a series of memoranda of understanding (MOUs), frequently asked questions (FAQs), staff guidance, and no-action relief affecting many U.S. derivatives market participants. Along with recently announced enforcement priorities from new CFTC Enforcement Director David Miller, the CFTC has provided market participants with crucial insights into its regulatory and enforcement priorities across key areas of its jurisdiction, including prediction markets and digital assets.
CFTC Reaffirms Its Exclusive Jurisdiction over Prediction Markets
Over the past two months, the CFTC has reaffirmed its intent to be the exclusive regulator of prediction markets and outlined its plans to prioritize enforcement against insider trading and market manipulation in those markets.
On February 17, 2026, the CFTC filed an amicus brief in defense of its exclusive jurisdiction over commodity derivatives, including event contracts, in the Ninth Circuit case North American Derivatives Exchange Inc. et al v. The State of Nevada on relation of the Nevada Gaming Control Board et al. The amicus brief stated the CFTC’s position that it has the expertise and responsibility to defend its exclusive jurisdiction over the “full spectrum” of event contracts and outlines the Commodity Exchange Act’s (CEA) broad preemption of state law.
In announcing the CFTC’s amicus filing, Selig explained that recent efforts to limit access to prediction markets intruded on the CFTC’s exclusive jurisdiction, and he added that “the CFTC has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.”
That broad assertion of jurisdiction was echoed by Miller in remarks delivered on March 31, 2026, which outlined the CFTC’s new enforcement priorities. Speaking at NYU Law School, Miller framed prediction markets as firmly within the CFTC’s core enforcement mission. He explicitly rejected what he called a misconception that insider trading laws do not apply to prediction markets, and he underscored that event contracts are swaps within the commission’s jurisdiction and therefore subject to the same insider trading, fraud, and manipulation prohibitions that apply across CFTC‑regulated markets.
Key Takeaway: Under Selig’s leadership, the CFTC will take a much more proactive approach to asserting its jurisdiction over prediction markets.
CFTC Enforcement Division Issues Prediction Markets Advisory
On February 25, 2026, the CFTC's Division of Enforcement published an advisory following the public announcement of two insider trading enforcement actions involving misuse of nonpublic information and fraud tied to event contracts traded on KalshiEX, a designated contract market (DCM).
One action involved a political candidate trading on his own candidacy on Kalshi, in violation of Kalshi’s rules. Kalshi’s Rulebook prohibits trading in a contract over which the trader has direct or indirect influence over the outcome. The CFTC noted that this was also a potential violation of CEA Section 6(c)(1) and CFTC Regulation 180.1(a) and (3) for use of a manipulative scheme or artifice to defraud.
Another action involved an individual trading an event contract involving a YouTube channel for which the individual had an employment relationship and access to material nonpublic information (i.e., advance knowledge of the contents of the channel’s videos before they were posted). The CFTC noted that this was also a potential violation of CEA Section 6(c)(1) and CFTC Regulation 180.1(a) and (3) for misappropriation of confidential information in breach of a preexisting duty of trust and confidence to the source of information.
Key Takeaways:
- The advisory did not create any new obligations or guidance. Instead, the division issued a reminder that it has full authority to police illegal trading practices occurring on any DCM. The division noted that DCMs also have an independent duty to enforce their rules, and its staff will continue to coordinate with DCMs on referrals of rule violations to the division for potential investigation.
- While there is significant overlap between Kalshi's and the CFTC's insider trading rules, the Kalshi version is broader and has the potential to sweep in significantly more traders.
CFTC and SEC Announce MOU to Strengthen Coordination
On March 11, 2026, the CFTC and Securities and Exchange Commission (SEC) announced that they entered into an MOU to support harmonization, coordination, and collaboration between the two agencies. Notably, the MOU outlines procedures for regular meetings, data sharing, advance notifications, and cross-training across the CFTC and SEC. The agencies will work to conduct coordinated exams, share exam findings, consult one another regarding enforcement investigations, and work toward interoperability on economic analysis, risk monitoring, and surveillance.
Key Takeaway: The MOU creates a framework for collaboration that will potentially benefit several entities:
- Dual registrants (e.g., swap execution facilities/security-based swap execution facilities, futures commission merchants/broker-dealers, commodity trading advisors/investment advisers).
- Swap and security-based swap reporting counterparties.
- Market participants transacting in digital assets and other products that have historically been difficult to classify.
Less than a week after publishing the MOU, the agencies issued a joint interpretation clarifying how the federal securities laws apply to certain crypto assets. There are no deadlines set forth in the MOU, but we expect to see swift additional actions implementing this new framework of coordination.
CFTC Division of Market Oversight Publishes Prediction Markets Advisory
Following the Division of Enforcement’s staff advisory on prediction markets, on March 12, 2026, the CFTC’s Division of Market Oversight (DMO) published its own guidance for DCMs listing event contracts. The guidance focused largely on DCMs’ obligation to list only contracts that are not readily susceptible to manipulation, and included the following points:
DCMs are encouraged to consider whether certain categories of event contracts contain a heightened potential of manipulation or price distortion, including sports event contracts that settle based on the act of one individual or a small group of individuals (e.g., injuries, unsportsmanlike conduct, etc.). DMO staff also noted that settlement outcomes that depend on the aggregate performance of multiple participants over an extended period of play reduces the ability of any individual actor to manipulate the settlement value. DMO encouraged DCMs to engage with staff in the early stages of designing these contracts.
The guidance states that DCMs should evaluate the nature and sources of data comprising the calculations and mechanisms in place to ensure the accuracy and reliability of the index that is used to determine the settlement value of non-price-based products.
Where a product has multiple possible permutations, DMO reminded DCMs that overly broad product listings may impact a DCM’s ability to provide a complete Core Principles compliance analysis for each underlying event. It expects product submissions to include a description of settlement methodology that accounts for potential permutations of the contract, including identification of data source on which settlement will be based, and an assessment of the reliability, objectivity, and manipulation resistance of such sources. DMO encourages proactive engagement with staff when designing contracts with multiple possible permutations.
For sports event contracts, the guidance recommended proactive communication with the relevant sports governing bodies when developing product specifications and compliance programs, an explanation in a product filing on whether a contract is consistent with the relevant sports league’s integrity standards, establishing information sharing with the relevant sports integrity monitoring organization, and relying on official data provided by the relevant league as the settlement source.
Key Takeaways:
- Proactive engagement with DMO staff and the relevant sports league or governing body may reduce the likelihood of CFTC action against the DCM.
- The CFTC is expecting more collaboration with sports governing bodies and the application of their integrity standards to sports contracts.
- DMO supports “innovation and growth” in these markets.
CFTC Seeks Comments on Advance Notice of Proposed Rulemaking on Prediction Markets
On March 12, 2026, the CFTC published an advance notice of proposed rulemaking (ANOPR) on prediction markets and a related request for comments. The CFTC seeks information and public comment on statutory core principles and CFTC regulations that apply to prediction markets, the types of event contracts that may be prohibited as contrary to the public interest, and cost-benefit considerations related to prediction markets.
The ANOPR includes 40 questions (and many additional subquestions) on topics such as insider trading, classifying event contracts as swaps vs. futures, determining whether an event contract is in the public interest, and how event contracts are used as hedging tools.
Key Takeaways:
- Based on the questions set forth in the ANOPR, the CFTC seems to have an appetite to issue a rulemaking that addresses some of the risks that are specific to prediction markets, including insider trading, protections for retail traders, dispute resolution, and position limits aggregation.
- The CFTC intends to use the responses to its questions to inform a potential future agency action.
- Comments are due on April 30, 2026.
CFTC No-Action Position on Self-Custodial Crypto Asset Wallet Software Provider
On March 17, 2026, the CFTC Market Participants Division published no-action relief for Phantom Technologies Inc., based on certain proposed activities that would expand Phantom’s self-custodial wallet offering. Essentially, Phantom would act as a technology service vendor (TSV) that offers front-end interface software for users to review market data and submit orders for derivatives products directly to futures commission merchants (FCMs) and designated contract markets (DCMs), Phantom would potentially receive a specified portion of the relevant revenue from these FCMs and DCMs.
The no-action relief effectively obviated the need for the user interface provider to register as an introducing broker (IB) subject to the 10 conditions set forth in the letter. These conditions include the provision of certain risk and conflict disclosures to users, adoption of policies to comply with the National Futures Association (NFA) IB marketing rules, recordkeeping requirements, and notification requirements on statutory disqualifications or insolvency.
Key Takeaways:
- While specific to Phantom, the no-action relief demonstrates the CFTC’s views on when a user interface/software provider needs to register as an IB.
- The no-action relief seems to contemplate that a permanent rulemaking on this topic could be forthcoming.
CFTC, SEC Issue Joint Guidance on Crypto Assets
As discussed in our prior advisory, the SEC and CFTC have provided greater clarity regarding the regulatory treatment of crypto assets via an SEC interpretive release addressing the definition of security and its application to certain types of crypto assets. The CFTC joined the interpretation to provide guidance that the agency will administer the CEA consistent with the interpretation, and that certain crypto assets that are not securities could fall under the CEA’s definition of commodity.
Most importantly, the interpretation classified crypto assets into five categories:
- Digital commodities (not securities).
- Digital collectibles (not securities).
- Digital tools (not securities).
- Stablecoins (not securities).
- Digital securities (or “tokenized securities”).
The SEC addressed how a crypto asset that is not a security may be considered an investment contract, and how it may lose its status as an investment contract. The agency also explained that protocol mining, protocol staking, and the wrapping of crypto assets that are not securities do not involve the offer and sale of a security, and that “airdrops” do not involve an “investment of money” under the Howey test.
Key Takeaways:
- The SEC and CFTC intended this interpretation to complement the CLARITY Act, but until the terms of the legislation are finalized, we will not know if this interpretation is aligned or in conflict with those terms (and therefore this interpretation may be very temporary).
- The agencies are following through on the President’s Working Group on Digital Assets’ call to, in the absence of legislation, use their existing authority to create regulatory clarity as much as possible.
- The token taxonomy lends further credence to the idea that most crypto assets are likely to be considered commodities, meaning that they will be subject only to the CFTC’s enforcement jurisdiction.
CFTC–MLB Memorandum of Understanding
On March 19, 2026, the CFTC and Major League Baseball (MLB) announced the signing of an MOU, establishing a framework for the regulatory authority and sports league to discuss, cooperate, and exchange information on the integrity of professional baseball and the related prediction markets. The MOU creates a framework for information sharing but does not require either organization to report to the other. There are strong confidentiality protections in place for any information that is shared.
Key Takeaways:
- This is consistent with the DMO prediction markets advisory, in which DCMs are encouraged to coordinate with the MLB and other sports leagues to ensure the DCM product listings are in keeping with the sports leagues’ integrity standards.
- It is safe to assume that other MOUs may be coming from the CFTC and other sports leagues.
CFTC FAQs on Registrant and Registered Entity Activities Involving Crypto Assets and Blockchain Technology
On March 20, 2026, the CFTC Market Participants Division and Division of Clearing and Risk published responses to FAQs for registrants and registered entities engaging in activities involving crypto assets and blockchain technology, adding further clarity to the CFTC’s tokenized collateral guidance (Staff Letter 25-39) and no-action position on digital assets accepted as margin collateral (Staff Letter 26-05). The FAQs include the following:
- FCMs may accept crypto assets that are not securities, including subject to applicable haircuts, as deposits to margin futures, foreign futures, or cleared swaps accounts.
- FCMs may deposit proprietary stablecoins as residual interest in customer segregated accounts for futures, foreign futures, and cleared swaps transactions, and must impose a capital charge of at least 2% of the market value of the payment stablecoins.
- FCMs may not deposit proprietary crypto assets other than payment stablecoins in customer segregated accounts as residual interest.
- FCMs may not invest customer funds in payment stablecoins.
- Swap dealers may not exchange crypto assets as initial or variation margin for uncleared swaps but may exchange tokenized versions eligible collateral assets if they grant effectively the same rights to the holder.
- FCMs should apply a 20% minimum capital charge for inventory positions in bitcoin (BTC) and ether (ETH) and a 2% capital charge for payment stablecoins.
- Derivatives clearing organizations (DCOs) may accept crypto assets, including payment stablecoins as initial margin for cleared transactions so long as it meets the DCO requirement for only accepting initial margin with minimal credit, market, and liquidity risks.
- DCOs are responsible for setting haircuts on assets accepted as initial margin, including crypto assets and payment stablecoins, reflecting appropriate risks and taking into consideration stressed market conditions on a monthly basis.
- FCMs must file a notice with the CFTC’s Market Participants Division in WinJammer before relying on the no-action relief in Staff Letter 26-05.
- FCMs must meet three conditions during the first three months to rely on Staff Letter 26-05:
- Only BTC, ETH, and payment stablecoins are acceptable as collateral.
- Prompt written notice is required of any significant operation or system issue or disruption.
- Weekly WinJammer filings are required on the total amount of crypto assets held in each futures, foreign futures, and cleared swaps account.
Key Takeaway:
- The CFTC’s FAQs, which offer practical and practicable guidance for acceptable crypto assets as collateral, demonstrate the agency’s support for innovation and early adoption of blockchain technology and digital assets in U.S. derivatives markets.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Services team.
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