HR-7942-119
Referred to the Subcommittee on Commodity Markets, Digital Assets, and Rural Development.
Sponsored by Mike Levin (D-CA)
What it does
This bill would amend the Commodity Exchange Act to prohibit regulated exchanges from listing or clearing derivatives contracts (such as event-based swaps) that reference terrorism, assassination, war, or similar activities, or that involve or correlate closely with an individual's death. The Commodity Futures Trading Commission (CFTC) would determine which contracts fall under the prohibition.
Who benefits
The general public and potential contract counterparties who might otherwise be exposed to speculative "death betting" markets; families of individuals who could be the subject of such contracts; the CFTC gains clearer statutory authority to police this contract category; exchanges avoid reputational risk from hosting ethically controversial products.
Who is hurt
Prediction market operators and event-contract exchanges (such as those offering war- or mortality-linked contracts) that would lose a potential product line; traders and speculators who use such contracts for hedging or speculation; firms developing novel event-derivative products in this space, who would face new regulatory limits on their offerings.
Supporters argue
Supporters argue that allowing financial markets to create tradable contracts tied to assassinations, wars, or individual deaths creates perverse incentives and moral hazard, potentially rewarding those with advance knowledge of violent events. They contend this closes a regulatory gap exposed by recent prediction-market platforms that have proposed or floated event contracts tied to geopolitical conflict and mortality, protecting market integrity and public trust in commodity exchanges.
Opponents argue
Opponents argue the bill's language is vague, since "similar activity" and contracts that "could otherwise be construed as correlating closely to an individual's death" are not clearly defined, potentially sweeping in legitimate hedging instruments like life-settlement-linked derivatives or catastrophe bonds. They contend that broad delegation to the CFTC to determine what qualifies risks arbitrary enforcement and may chill innovation in legitimate risk-transfer products used by insurers and pension funds.
Constitutional context
Congress has authority to regulate commodity derivatives markets under the Commerce Clause, and the bill's delegation of "as determined by the Commission" language to the CFTC raises nondelegation and vagueness questions reviewable under the Due Process Clause; post-Loper Bright, any CFTC interpretation of these terms would face independent judicial review rather than automatic deference.
Checks and balances
Congress would grant the CFTC (an executive branch agency) authority to determine which contracts are prohibited, with courts serving as a check through post-Loper Bright independent review of the agency's interpretation of vague statutory terms like "similar activity."
Historical precedent
The CFTC has previously used its authority under the Commodity Exchange Act to block contracts deemed contrary to the public interest, such as its 2012 rejection of political event contracts proposed by Nadex, though this bill would create an explicit statutory prohibition rather than relying on case-by-case agency review.