Comment Text:
Subject: Comments on Advance Notice of Proposed Rulemaking regarding Prediction Markets
To the Secretary of the Commission,
Primev appreciates the opportunity to provide the Commodity Futures Trading Commission (the "Commission") with information regarding the evolution of event contract derivatives. As a US based developer we are currently developing a hybrid prediction market platform that utilizes both on-chain and off-chain architectures to facilitate two primary types of event contracts: high-frequency crypto-price benchmarks and real-time, team-based sports outcomes. We offer the following comments in response to the Commission’s request:
I. Market Integrity and Manipulation (Addressing Core Principle 3)
The Commission seeks input on factors determining if a contract is "readily susceptible to manipulation".
- Team-Based Sports Outcomes: For our upcoming live sports contracts, we prioritize team-based outcomes rather than individual player statistics. Team outcomes are significantly more difficult to manipulate as they rely on the collective effort and are verified by multiple official data providers, satisfying the requirement that contracts be resistant to distortion.
- Crypto-Price Benchmarks: Our 5-minute event contracts for crypto prices utilize oracles and aggregate "Official Data" to ensure settlement is based on canonical, decentralized market consensus rather than a single, easily manipulated exchange price or data.
II. Technology as a Regulatory Tool (Addressing Core Principle 20)
The Commission has requested information on blockchain-based prediction markets and operational risks.
- Hybrid Architecture: By utilizing an on-chain settlement layer, our platform provides an immutable, real-time audit trail of all transactions and settlements. This transparency assists the Commission in market surveillance and the detection of abusive trading practices, such as wash trading or pre-arranged trades, more effectively than traditional opaque systems.
- Enhanced Price Discovery: Our model supports the Commission's goal of "promoting responsible innovation" by using information aggregation to reflect aggregate beliefs on event occurrences.
III. Public Interest Considerations (Addressing CEA Section 5c(c)(5)(C))
The Commission is evaluating which contracts may be contrary to the public interest.
- Economic Utility: Our contracts are designed for "managing and assuming price risks". For example, sports-related contracts allow small businesses and vendors in the sports-adjacent economy to hedge against the financial consequences of specific team outcomes.
- Deterring Offshore Flight: As the 2026 FIFA World Cup approaches, providing a regulated U.S. framework for these contracts is essential to protect market participants from fraudulent or abusive practices prevalent in unregulated offshore markets.
IV. Conclusion
We urge the Commission to adopt a flexible, principles-based regulatory framework that recognizes the inherent transparency of blockchain settlement and the manipulation-resistant nature of team-based sports outcomes. As US based developers and innovators, we encourage an emphasis on establishing a path for compliant early stage innovation. We look forward to further engaging with the Commission's Innovation Task Force to ensure our technical stack meets all statutory core principles.
Respectfully,
Murat Akdeniz
Founder & CEO, Primev
