Polymarket is a ‘social epistemic tool’ for the public, Vitalik Buterin argues, as CFTC scrutiny intensifies

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Ethereum co-founder Vitalik Buterin has come to the defense of Polymarket, a decentralized prediction market platform, as it faces increasing regulatory scrutiny. Buterin’s support comes at a crucial time when the US Commodity Futures Trading Commission (CFTC) is proposing limits on such platforms.

Buterin argues that classifying Polymarket as gambling misunderstands the nature and purpose of prediction markets. He emphasizes their role as “social epistemic tools” that provide valuable insights into future events and public sentiment.

“Putting Polymarket into the ‘gambling’ category is a massive misunderstanding of what prediction markets are or why people (including economists and political intellectuals) are excited about them,” Buterin wrote on X.

The CFTC’s proposed restrictions, announced in May, aim to curtail prediction markets related to the US election, citing public interest concerns. Senator Elizabeth Warren supported this position, signing a motion to ban election-related prediction markets.

Other crypto industry leaders joined Buterin in opposing the CFTC’s position. Gemini co-founder Cameron Winklevoss praised decentralized prediction markets for their “real public utility,” emphasizing their ability to provide valuable predictions based on financial responsibility. In comments to the CFTC, Gemini also urged the regulator to withdraw its proposal.

“Decentralized prediction markets represent a significant innovation with real public utility. They provide valuable information about future events based on financial responsibility,” argued Winklevoss.

Coinbase Chief Legal Officer Paul Grewal expressed concern about the ambiguous definition of “gaming” in the CFTC’s proposal. These reactions underscore industry resistance to what they perceive as overbroad regulatory measures.

Despite the regulatory challenges, Polymarket has seen a surge in popularity, particularly with regard to US election forecasting. In July, Crypto Briefing reported that the platform had reached over $100 million in monthly trading volume. Recent data from Dune Analytics indicates that the platform’s monthly trading volume reached over $390 million in August, with a record 53,981 monthly active traders. This increase is largely attributed to increased interest in the election results.

The platform currently shows Donald Trump and Kamala Harris tied at 50 percent in predictions for the presidential race, while Republicans lead Senate predictions with 71 percent to Democrats’ 29 percent. These numbers highlight the platform’s role in gauging public sentiment about political events.

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