Paradigm Asserts That Prediction Markets Are Indispensable For Crypto In Hedging Regulatory Risk
Paradigm, a firm, is backing predictions market Kalshi in its lawsuit against the CFTC, asserting that betting on U.S. politics is a crucial tool for crypto businesses.
Paradigm, led by Coinbase co-founder Fred Ehrsam, is backing prediction market Kalshi in its legal dispute with the U.S. Commodity Futures Trading Commission (CFTC). The CFTC disapproved of Kalshi’s contract allowing bets on U.S. Congress control, citing legal concerns.
In September, the CFTC issued an order against Kalshi’s contract, deeming it unlawful under state law. Kalshi subsequently filed a lawsuit against the regulator, alleging overreach of authority.
“While Kalshi isn’t a crypto company, we felt compelled to intervene in this case because we believe that prediction markets are one of the potentially revolutionary use cases for crypto,” Paradigm said in a post on Monday.
“The likelihood that Congress will pass legislation that will impact the viability of U.S.-based crypto startups is directly affected by which party is in control of Congress, or whether the government is divided,” Paradigm said in a blog post.
Political events significantly impact the crypto industry’s regulatory landscape, according to Paradigm. Betting on outcomes provides valuable insights for crypto companies to adjust corporate strategies and mitigate regulatory risks, the firm stated in its amicus brief filed in the U.S. District Court for the District of Columbia.
In its amicus brief, Paradigm suggested that prediction markets could offer more accurate forecasts of electoral outcomes compared to public opinion polling. The requirement for participants to have personal stakes in the predictions enhances the utility of platforms like Kalshi, benefiting not just crypto entrepreneurs but also the broader public, the firm contended.
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