Today, HPC filed a comment letter with the Commodity Futures Trading Commission (“CFTC” or “Commission”) in response to its Advance Notice of Proposed Rulemaking on Prediction Markets (the “ANPRM”). The ANPRM is principally focused on centralized prediction markets. While we agree that clear rules for those structures are a welcome and necessary first step, our comment makes the affirmative case for decentralized prediction markets built on public, permissionless blockchains. We urge the Commission to:

1. Write flexible, function-based rules that can accommodate decentralized market structures;

2. Establish an affirmative path for U.S. market participants to access decentralized prediction markets; and

3. Promote American leadership in decentralized financial innovation.

The federal derivatives framework exists to facilitate price discovery across a wide range of commodities. Public, market-based prices are a public good: they aggregate dispersed information, enable producers and consumers to plan and hedge economic exposures, and provide important informational value to political and economic decisionmakers. Over the past century, Congress has steadily expanded the reach of the federal derivatives laws to bring new markets and new derivative types within that framework. 

Prediction markets are the natural evolution of that arc. They give participants a precise instrument to assume and manage economic exposure to discrete real-world events rather than through imperfect proxies, and they aggregate dispersed private knowledge into continuously updating public price signals that consistently outperform expert punditry and traditional polling methods. The informational value of prediction market pricing is already well established, with prediction market data now integrated into major trading terminals, financial and news outlets, and social media platforms. 

Public, permissionless blockchain infrastructure is particularly well-suited to maximize the price discovery and risk management benefits that prediction markets, and derivatives markets more generally, are designed to deliver. Decentralized prediction markets are transparent, non-custodial, and operationally resilient by design. They owe their superiority to the facts that: 

• No central operator holds customer funds or serves as a single point of failure for the market's continued operation;

• Transactions are recorded in real-time on a public ledger accessible to regulators and market participants alike;

• Market access is determined by transparent, uniform standards rather than discretionary admission criteria; and

• Market data and posted collateral are natively composable with other onchain primitives, including smart contract environments and trading and risk management protocols.

Each of these properties advances the regulatory objectives that Congress and the Commission have established for centralized prediction markets, including impartial access, settlement integrity, customer protection, and effective market surveillance.

Our comment seeks to ensure that rulemaking designed for centralized market structures does not entrench assumptions about the role of a single exchange operator, the necessity of custodial intermediation, or mechanics of surveillance and settlement that would prevent a lawful pathway for Americans to access decentralized prediction markets. Enabling access to decentralized prediction markets in the United States will require additional steps beyond this rulemaking, but the Commission has a unique opportunity to shape that path at a moment when the technology is mature, market demand is strong, and the United States is positioned to lead.

HPC is focused on ensuring that U.S. market participants can access Hyperliquid, including HIP-4 outcome markets, that builders have regulatory certainty, and that decentralized prediction markets can develop in the United States. We will continue to engage with the Commission and its staff to that end. 

Read our full comment letter here.