Paradigm Supports Kalshi in Legal Battle with U.S. Regulator
An investment firm led by Coinbase co-founder Fred Ehrsam, Paradigm, is backing prediction market platform Kalshi as it challenges a ruling by the Commodity Futures Trading Commission (CFTC). The CFTC disapproved of Kalshi’s contract that allowed users to bet on the party that would control the U.S. Congress for the next term, citing illegality under state law. Kalshi filed a lawsuit against the regulator, arguing that it exceeded its authority.
Paradigm, although not a crypto company, decided to intervene because it sees prediction markets as a potentially revolutionary use case for crypto. Political events have significant implications for the crypto industry’s future regulations, and observing betting patterns can help companies adjust their strategies and manage regulatory risks.
Betting as an Indicator
According to Paradigm’s amicus brief filed in court, the outcome of elections directly affects the likelihood of Congress passing legislation that could impact U.S.-based crypto startups. Prediction markets may even be more accurate predictors than public opinion polling because participants have a personal stake in the game. This makes platforms like Kalshi valuable not only to crypto entrepreneurs but also to the general public.
Hot Take: Paradigm Backs Kalshi in Legal Battle Against CFTC
An investment firm led by Coinbase co-founder Fred Ehrsam, Paradigm, is throwing its support behind prediction market platform Kalshi in its legal dispute with the Commodity Futures Trading Commission (CFTC). The CFTC disapproved of Kalshi’s contract allowing users to bet on which party would control the U.S. Congress for the next term. However, Kalshi sued the regulator, claiming it had overstepped its authority.
Paradigm believes that prediction markets have the potential to revolutionize the crypto industry and decided to intervene in the case. Political events play a crucial role in shaping regulations, making betting patterns useful for crypto companies in adjusting their strategies and managing regulatory risks. Paradigm argues that prediction markets can provide more accurate electoral predictions than public opinion polling since participants have a personal stake in the outcome. This makes platforms like Kalshi beneficial not only for crypto entrepreneurs but also for the general public.
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