While the current SEC has generally taken a light touch when it comes to regulation of innovative financial products like crypto, the burgeoning prediction markets may be another matter. According to this report in Crypto.News, during his testimony last week before the Senate Banking Committee, SEC Chairman Paul Atkins warned that the agency is taking a hard look at those markets:

Atkins said the legal status of prediction markets isn’t always clear. He noted that jurisdiction overlaps between the SEC and the Commodity Futures Trading Commission (CFTC). “Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,” Atkins said.

Historically, the CFTC has been seen as the primary federal regulator for these markets. Atkins said the SEC may regulate some markets depending on how they’re structured, especially if contracts resemble securities.

“We have enough authority,” he told lawmakers, adding that a “security is a security regardless how it is and some of the nuance with prediction markets and the products depends on wording.”

The report says that SEC officials are meeting with their counterparts at the CFTC, and quotes CFTC Chair Michael Selig as saying that – where have you heard this before? – regulators’ goal is a regime that protects investors while not driving innovation offshore. Stay tuned.

– John Jenkins