Tag: CFTC

  • SEC vs. CFTC: Understanding Crypto Regulation in the US

    SEC vs. CFTC: Understanding Crypto Regulation in the US

    Cryptocurrency regulation in the United States is divided among several authorities rather than controlled exclusively by one agency. The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have different statutory responsibilities, with oversight depending heavily on how an asset, transaction, or financial product is classified.

    SEC Oversees Securities

    The SEC administers federal securities laws. Its authority applies when crypto-related activities involve securities, including transactions structured as investment contracts.

    In March 2026, the SEC issued an interpretation explaining how federal securities laws apply to crypto assets and transactions. It established a taxonomy covering categories including digital commodities, digital collectibles, digital tools, payment stablecoins, and digital securities. The CFTC simultaneously provided guidance explaining that it would administer the Commodity Exchange Act consistently with the SEC interpretation.

    Importantly, a crypto asset that is not itself a security can still be involved in an investment contract depending on how it is offered and the surrounding circumstances.

    In August, the SEC also proposed Regulation Crypto Assets, which would establish a tailored securities-offering framework for certain investment contracts involving crypto assets. The proposal has not itself replaced existing federal law.

    The CFTC Oversees Commodity Derivatives

    The CFTC’s established authority includes derivatives markets involving commodities, including futures, options, and swaps tied to digital commodities.

    Spot markets are more complicated as the CFTC does not have the same comprehensive regulatory framework for ordinary spot commodity trading that it has over derivatives.

    In September 2025, SEC and CFTC staff clarified that SEC- and CFTC-registered exchanges are not prohibited from facilitating certain spot crypto commodity products. However, the statement itself did not change existing law or create new obligations.

    The CFTC continued updating its crypto guidance in September 2026. On September 24, staff revised FAQs covering matters including tokenized permitted investments and blockchain-based recordkeeping for registered market participants.

    Congress Has Not Finalized a Broader Framework

    Congress has considered legislation intended to create clearer statutory boundaries for digital-asset regulation.

    On September 15, the Senate failed to advance the CLARITY Act, with the procedural vote receiving a 49-50 majority but falling short of the 60 votes required to proceed. Four Republican senators joined Democrats in opposing advancement. Senator Thom Tillis moved to reconsider the vote, preserving the possibility that the measure could be reconsidered.

    For now, this leaves the SEC and CFTC operating largely through their existing statutory authorities rather than a newly enacted comprehensive crypto market-structure law.

    Classification Determines Oversight

    The key regulatory question is therefore not simply whether cryptocurrency belongs to the SEC or CFTC.

    A digital security or transaction involving an investment contract can fall under securities laws, while derivatives involving digital commodities fall within the CFTC’s established jurisdiction.

    Stablecoins, banking activities, anti-money-laundering requirements, and state licensing can bring additional regulators into the picture.

    The SEC added further clarification on September 25 through staff FAQs addressing its March crypto interpretation. The agency specifically notes that these FAQs represent staff views and have no legal force or effect.

    Why This Matters

    Whether a crypto product falls under SEC or CFTC oversight can affect registration, trading, disclosures, and compliance obligations. Clearer jurisdictional boundaries could therefore influence how exchanges, issuers, and financial institutions structure cryptocurrency products for the US market.

    Final Thoughts

    US cryptocurrency regulation remains divided between the SEC, CFTC, and other authorities. Recent guidance has clarified some boundaries, but it does not replace legislation establishing a comprehensive market structure. Future congressional action could further define how responsibilities are divided.

    Also Read: How the GENIUS Act Could Change Stablecoin Regulation

    FAQs

    1. Does the SEC or CFTC regulate cryptocurrency in the US? Both agencies have roles. The SEC administers securities laws, while the CFTC regulates commodity derivatives and has authority under the Commodity Exchange Act within its statutory jurisdiction.
    2. When does cryptocurrency fall under SEC oversight? SEC oversight can apply when a crypto asset is a security or a transaction involves an investment contract. The SEC issued a detailed interpretation of these classifications in March 2026.
    3. What cryptocurrency activities does the CFTC regulate? The CFTC regulates derivatives involving digital commodities, including relevant futures, options, and swaps. Its authority over ordinary spot commodity markets differs from its comprehensive derivatives oversight.
    4. What is the SEC’s Regulation Crypto Assets proposal? Proposed in August 2026, Regulation Crypto Assets would establish tailored offering exemptions and other rules for certain investment contracts involving crypto assets. The proposal is not yet a final rule.
    5. Why does crypto classification matter for regulation? Classification can determine which federal laws and regulatory requirements apply to an asset, transaction, or market participant. It can affect areas such as registration, disclosures, trading, and compliance obligations.
  • Cryptocurrency Regulation in 2026: US Rules, MiCA, Stablecoin Laws, and Exchange Compliance

    Cryptocurrency Regulation in 2026: US Rules, MiCA, Stablecoin Laws, and Exchange Compliance

    Cryptocurrency regulation does not operate through one universal rulebook. Governments regulate different parts of the market, including exchanges, securities, commodities, stablecoins, taxation, custody and anti-money-laundering obligations through separate legal frameworks. As a result, the legal treatment of the same crypto activity can differ significantly depending on jurisdiction, asset structure and service provided.

    Why Crypto Can Fall Under Different Regulators

    A cryptocurrency’s regulatory treatment often depends on what the asset represents and how it is offered. In the United States, the Securities and Exchange Commission (SEC) oversees securities markets, while the Commodity Futures Trading Commission (CFTC) regulates derivatives and exercises authority under the Commodity Exchange Act.

    In March 2026, the SEC issued an interpretation establishing five crypto-asset categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities. The CFTC joined the interpretation regarding administration of the Commodity Exchange Act. The interpretation also addresses protocol staking, mining, airdrops and circumstances where transactions involving non-security crypto assets can become subject to securities laws through an investment contract. The framework became effective on March 23, 2026.

    US Crypto Rules Continue to Develop

    US regulation is still evolving. In August 2026, the SEC proposed Regulation Crypto Assets, a tailored securities-offering framework for certain investment contracts involving crypto assets. It builds on the agency’s March interpretation but remains a proposed rule rather than a finalized regulation. Stablecoins are developing under a separate framework. US regulators proposed rules in June requiring permitted payment-stablecoin issuers to operate customer identification programs under implementation of the GENIUS Act. This shows why crypto regulation can involve several distinct regulatory regimes.

    Exchanges Face Compliance Requirements

    Regulation also focuses heavily on intermediaries. Depending on the jurisdiction and services offered, exchanges and other crypto service providers can face registration, customer-identification, anti-money-laundering, custody, recordkeeping and transaction-reporting requirements. These obligations regulate businesses facilitating crypto activity rather than necessarily changing the underlying blockchain protocol.

    Europe Uses the MiCA Framework

    The European Union uses the Markets in Crypto-Assets Regulation (MiCA) to establish harmonized requirements for crypto-asset issuers and service providers. An important transition occurred in 2026. ESMA confirmed that MiCA’s EU-wide transitional period expired on July 1, 2026. Crypto-asset service providers relying on that transition without obtaining required MiCA authorization must cease providing affected services to EU clients. This creates a more standardized licensing environment across the EU compared with jurisdictions relying on multiple separate regulatory frameworks.

    Regulation Does Not Eliminate Investment Risk

    Regulatory authorization does not mean a government guarantees a cryptocurrency’s value. Investors still face price volatility, cybersecurity incidents, liquidity problems, fraud and custody risks. Regulatory frameworks primarily establish legal responsibilities, disclosure standards, operating requirements and consumer or market protections.

    Why This Matters

    Crypto increasingly connects with traditional finance through ETFs, stablecoins, tokenized assets and institutional markets. Understanding regulation helps investors distinguish between asset classification, exchange licensing and consumer protections while recognizing that requirements can differ significantly across jurisdictions and services.

    Final Thoughts

    Crypto regulation is becoming more structured, but there is still no single global framework. The US and EU demonstrate different approaches to classification, licensing and stablecoins. Investors and businesses therefore need to understand the rules applying specifically to their jurisdiction and activity.

    FAQs

    1. How does cryptocurrency regulation work? Crypto regulation depends on the jurisdiction, type of asset and activity involved. Different rules can apply to exchanges, securities, commodities, stablecoins, custody, taxation and anti-money-laundering compliance.
    2. Who regulates cryptocurrency in the United States? Multiple US authorities have responsibilities involving crypto. The SEC oversees securities markets, while the CFTC regulates derivatives and exercises authority under the Commodity Exchange Act within its statutory jurisdiction.
    3. What is MiCA cryptocurrency regulation? MiCA, or Markets in Crypto-Assets Regulation, establishes harmonized EU requirements for crypto-asset issuers and service providers. Its rules cover areas including authorization, disclosures, operations and certain stablecoin-related activities.
    4. Are stablecoins regulated differently from other cryptocurrencies? They can be. Since stablecoins are designed to maintain relatively stable values and may function as payment instruments, regulations can focus specifically on issuers, reserves, redemption rights, disclosures and customer-identification requirements.
    5. Does crypto regulation make cryptocurrency investing safe? No. Regulation can establish disclosure, licensing and consumer-protection requirements, but it does not guarantee investment returns. Crypto investors can still face volatility, fraud, cybersecurity incidents, liquidity problems and custody-related losses.
  • Bitcoin Crosses $80,000 as Institutional Hedging and US Regulatory Moves Reshape Market Outlook

    Bitcoin Crosses $80,000 as Institutional Hedging and US Regulatory Moves Reshape Market Outlook

    Bitcoin climbed above $80,000 on Friday as cryptocurrency markets strengthened, with analysts pointing to improving market structure and U.S. regulators advancing new digital-asset measures. The move erased earlier weekly losses and lifted major tokens across the market.

    According to CryptoQuant, Bitcoin is moving away from a zone of weakness and toward a possible bullish phase. The firm’s bubble-versus-crash indicator, which tracks speculative excess and severe market declines, suggests that extreme conditions tied to either a major bubble or a deep crash have faded. Bitcoin has already moved through a correction and consolidation period, the analysis notes, but it has not yet reached the speculative conditions that historically appeared near major cycle peaks.

    CryptoQuant Sees Bitcoin Moving Toward a Bullish Phase

    CryptoQuant said a full bullish rally has not started yet. Instead, Bitcoin is gradually moving closer to that stage as market conditions improve after the earlier correction. The analysis does not describe the market as entering an extreme expansion phase, but it does show Bitcoin leaving weaker conditions while still lacking the speculative intensity associated with previous major tops.

    Institutional Hedging Remains Heavier Than Gold

    JPMorgan’s analysis adds another layer to the market picture by comparing institutional positioning in Bitcoin with gold. The bank said institutional investors remain more defensively positioned toward Bitcoin than toward gold. Short interest and put options linked to Bitcoin exchange-traded funds, including BlackRock’s IBIT, provide investors with greater downside protection.

    Meanwhile, gold ETFs have recovered more of their 2026 outflows. Bitcoin ETFs still show heavier bearish hedging, although that positioning does not necessarily mean investors expect prices to fall.

    Hedge Unwinding Could Add Fuel to Bitcoin’s Rally

    Put options allow investors to protect portfolios against declines, while short positions can benefit when prices fall. In Bitcoin’s case, the heavier use of these tools shows that institutional portfolios retain meaningful downside protection. Yet those positions can change if Bitcoin keeps advancing. Investors may unwind hedges, while short sellers may buy Bitcoin-related exposure to close positions. The analysis suggests this process could create a potential $1 trillion market impact through hedge unwinding and short covering.

    Bitcoin’s latest price move arrived as regulatory activity accelerated in Washington. BTC rose above $81,000 and gained 5.5% over 24 hours. Ethereum gained 5%, XRP rose 6.5%, and Solana advanced 10%. Other crypto sectors also moved higher: decentralized finance tokens gained 8.5%, privacy tokens rose 6%, and governance assets climbed 11% during the same market advance.

    CFTC and SEC Measures Add to Friday’s Market Move

    The Commodity Futures Trading Commission submitted a proposal titled “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets” to the Office of Information and Regulatory Affairs on Thursday. The filing remains pending regulatory approval, and detailed provisions have not yet become available. The proposal follows comments from CFTC Chairman Michael Selig, who said the agency was “ready to ship rules” after the Senate failed to advance market structure legislation.

    The CFTC has also introduced a no-action position for providers of passive software. Its Market Participants Division said it will not recommend enforcement action against eligible providers or relevant personnel for certain registration failures involving introducing brokers.

    Meanwhile, the Securities and Exchange Commission released a temporary innovation exemption on Thursday. The measure provides a five-year conditional path for certain platforms to offer on-chain trading of tokenized stocks.

    These regulatory steps arrived as agencies pursued incremental measures while Congress remained stalled on comprehensive crypto legislation.

    Outlook

    Bitcoin’s move above $80,000 came as CryptoQuant reported improving market conditions and institutional investors maintained defensive hedges. At the same time, CFTC and SEC measures expanded regulatory activity. Further gains could prompt hedge unwinding and short covering, adding another source of Bitcoin buying pressure.

  • CFTC Issues No-Action Letter for Passive Software Firms Linking Users to Regulated Derivatives Markets

    CFTC Issues No-Action Letter for Passive Software Firms Linking Users to Regulated Derivatives Markets

    The Commodity Futures Trading Commission (CFTC) has granted conditional broker-registration relief to qualifying passive software providers that connect users with regulated derivatives markets. The agency’s Market Participants Division announced the no-action position on September 17, stating it will not recommend enforcement against eligible providers or their personnel for failing to register as introducing brokers or associated persons, provided they meet specific criteria.

    Staff Letter 26-25: Requirements and Scope

    The relief is outlined in Staff Letter 26-25, which imposes 10 requirements that providers must satisfy to qualify. The no-action position is narrow: it only covers enforcement recommendations related to introducing-broker and associated-person registration. It does not exempt providers from other obligations under the Commodity Exchange Act or CFTC regulations. Providers cannot rely on the letter for activities beyond those explicitly covered.

    The framework applies to software that enables users to trade through registered futures commission merchants (FCMs), introducing brokers, and designated contract markets (DCMs). Users must remain customers or direct members of the regulated firm handling their transactions, not of the software provider. This distinction places the software provider outside traditional intermediary functions, as the CFTC emphasized that the relief targets passive tools—not businesses that take custody, execute trades, or control customer accounts.

    Crypto Developers Not Automatically Covered

    The CFTC clarified that crypto developers do not receive blanket protection. Wallet developers and other digital-asset software companies may qualify when their products connect users with eligible derivatives markets, but eligibility depends on meeting the letter’s requirements and the nature of their services.

    Extension of Earlier Relief

    Staff Letter 26-25 follows a similar no-action position under Staff Letter 26-09, which covered software providing user access to regulated derivatives while registered firms retained responsibility for trade execution, customer accounts, and asset control. The new letter does not alter the Commodity Exchange Act; like all no-action letters, it states that the division will not recommend enforcement for specified conduct, without creating a formal exemption.

    Industry Reaction and Broader Regulatory Context

    Industry groups welcomed the move as added regulatory clarity. Digital Chamber CEO Cody Carbone said the action removes uncertainty for software providers building interfaces that connect users with registered FCMs and DCMs. Blockchain Association CEO Summer Mersinger noted that the division took a functional approach by examining what a provider actually does.

    The CFTC action arrived on the same day the Securities and Exchange Commission announced an ‘Innovation Exemption’ for tokenized US stocks. Both developments followed the Senate’s failed vote on the Digital Asset Market Clarity Act, which would have created a federal market-structure framework for digital assets. CFTC Chair Michael Selig had directed staff in August to explore crypto market-structure rules if Congress did not pass the legislation. Coinbase Vice Chairman Ryan VanGrack described the SEC and CFTC actions as a sharp change after years of regulatory standstill.

    In summary, the CFTC’s no-action position provides conditional protection to qualifying passive software providers meeting Staff Letter 26-25’s requirements. The relief remains limited to covered activities and does not change the Commodity Exchange Act. Crypto developers may qualify only when their tools fit the framework.

  • Senate Majority Leader Thune Anticipates CLARITY Act Vote, but No Date Set

    Senate Majority Leader Thune Anticipates CLARITY Act Vote, but No Date Set

    Senate Majority Leader John Thune expects an initial CLARITY Act vote before the summer recess, but no vote appears on the Senate schedule. His August 3 remarks left unclear whether senators will begin full debate or take only an early procedural step.

    Thune Signals Intent Without a Firm Date

    Thune told reporters, “I think market structure we’ll get a vote on. Whether we can get on it or not, we’ll see.” He also cited other unfinished Senate business. The August 4 agenda did not name the CLARITY Act. Instead, the Senate planned to resume consideration of H.R. 6500, a vehicle for a continuing resolution. The floor log said, “There are no votes scheduled at this time.”

    Leaders can still add votes after filing a motion, reaching an agreement, or securing enough support. Still, Thune did not identify whether he expected cloture, a motion to proceed, or another procedural action.

    Procedural Vote Doesn’t Equal Passage

    Most legislation requires 60 senators to end extended debate under cloture rules. A successful vote would move the bill forward, but senators could still face amendments and further procedural votes before the final passage. The House passed the CLARITY Act by 294–134 in July 2025. The Senate Banking Committee later advanced its version by 15–9 on May 14, 2026.

    These bipartisan results offer a base for negotiations. However, Republicans cannot reach the usual cloture threshold independently, so Thune needs Democratic votes while retaining concerned Republicans. Can Senate leaders resolve the disputes quickly enough to secure 60 votes and preserve enough floor time for final passage? The current schedule provides no firm answer.

    Ethics Disputes Complicate the Recess Push

    Ethics rules remain a major obstacle. Eleanor Terrett reported on August 3 that the White House had not answered a counterproposal from Senators Thom Tillis and Ruben Gallego. Terrett cited an unnamed source, not a public White House statement. The proposal reportedly covers enforcement and may give state attorneys general a role.

    A Reuters review found that the Senate proposal would restrict certain senior figures, including the president and vice president, from sponsoring or issuing digital assets. Justice Department enforcement would apply until January 2029.

    Meanwhile, seven Democratic negotiators said the proposal was not ready for passage. Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner and Raphael Warnock requested further changes.

    Their concerns cover ethics, consumer protection, illicit finance, conflicts of interest and market integrity. They also pledged to continue talks, leaving a bipartisan agreement possible but unresolved. Bernstein analysts said passage before recess looked less likely. That view can coexist with Thune’s comments because an opening vote may occur without enough time for debate and final passage.

    Government funding also competes for attention. On July 21, Thune called market-structure legislation only ‘a candidate for consideration’ and described funding as the Senate’s leading immediate priority.

    The CLARITY Act would divide digital-asset oversight between the SEC and CFTC. It also addresses fundraising, exchange registration, anti-money-laundering rules, decentralized finance, stablecoin rewards and tokenized securities. The next concrete signal would come from an updated Senate schedule or a formal motion. A cloture filing or motion to proceed would provide clearer evidence that floor action had begun.

    A Brief Roundup

    Thune expects an initial vote on the CLARITY Act, but the Senate has yet to schedule one. Ethics negotiations, the 60-vote cloture hurdle and competing funding work still threaten full passage before recess. Readers should watch for a cloture filing, motion to proceed, or updated floor schedule.

  • XRP Price Today: Breakout Setup Strengthens as SEC and CFTC Classify It as a Digital Commodity

    XRP Price Today: Breakout Setup Strengthens as SEC and CFTC Classify It as a Digital Commodity

    XRP traded near $1.08 after a difficult first half of 2026, while technical indicators pointed to a possible breakout and U.S. regulators formally classified the token as a digital commodity. The token lost 27.1% in the first quarter and another 22.4% in the second quarter, yet analysts now identify a rare alignment of chart signals and seasonal trends that could support a recovery. At the same time, a joint SEC-CFTC interpretive release removed long-running uncertainty over XRP’s status under U.S. law.

    Technical Setup Points to a Breakout Attempt

    On the daily TradingView chart, XRP remains inside a descending broadening wedge. Traders often view that pattern as a late-stage accumulation formation. The Relative Strength Index has also formed a bullish divergence. Meanwhile, buyers continue to defend the local bottom near $1.05.

    Historical data from CryptoRank shows that XRP has not posted a negative third-quarter close in the past seven years. July has gained 4.19% so far, and previous summer reversals produced sharp rebounds after weak June performance. In July 2023, XRP rallied 47.6% after an early-summer decline. Likewise, a similar reversal in July 2025 produced a 35% return.

    To confirm a breakout from the wedge, buyers must push the price above the $1.12-$1.18 resistance zone. A successful move could open a path toward medium-term targets between $1.45 and $1.60, representing a projected upside of about 50%.

    Nevertheless, broader market weakness and slower inflows into U.S. spot XRP ETFs could limit short-term gains. Even so, the current consolidation continues to build a base ahead of the next directional move.

    The SEC and CFTC Formally Classify XRP as a Commodity

    On March 17, 2026, the Securities and Exchange Commission and the Commodity Futures Trading Commission published a joint interpretive release that named XRP as a digital commodity. The agencies issued the document under Release Numbers 33-11412 and 34-105020.

    The 68-page release divides crypto assets into five categories: digital commodities, digital collectibles, digital tools, payment stablecoins, and digital securities. Only digital securities fall fully under SEC jurisdiction, while the CFTC oversees digital commodities.

    The release also listed Bitcoin, Ether, Solana, Dogecoin, Cardano, Avalanche, Chainlink, Polkadot, Hedera, Litecoin, Bitcoin Cash, Shiba Inu, Stellar, Tezos, and Aptos in the digital commodity category. Reports counted either 16 or 18 named assets, depending on how examples in the document were interpreted.

    According to the release, a digital commodity derives its value from the programmatic operation of a functional crypto system and from supply and demand dynamics rather than from expectations tied to managerial efforts. The agencies applied that standard to XRP since the XRP Ledger operates independently of Ripple’s managerial control.

    Read More: XRP Slips to $1.10 Despite XRPL Crossing 8 Million Accounts

    A Broader Policy Shift Takes Shape

    The release also addressed when a non-security crypto asset may become part of an investment contract and when that status may end. In addition, it discussed airdrops, protocol mining, protocol staking, and wrapped versions of non-security assets.

    The guidance followed the SEC’s creation of the Crypto Task Force in January 2025 and the launch of Project Crypto as a joint SEC-CFTC initiative in January 2026. The agencies also announced a memorandum of understanding shortly before issuing the release.

    SEC Chair Atkins stated at the DC Blockchain Summit that the agency is not the ‘securities and everything commission anymore.’ CFTC Chair Selig said the wait was over and pledged to establish rules that would allow the crypto industry to operate onshore.

    What’s Next?

    XRP continues to trade within a key technical pattern as buyers target a breakout above the $1.12–$1.18 resistance zone. At the same time, the SEC and CFTC have officially classified XRP as a digital commodity, removing a major regulatory uncertainty while market participants watch for the next price move.

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  • North Carolina Enacts Landmark Law Recognizing Federal Oversight of Prediction Markets

    North Carolina Enacts Landmark Law Recognizing Federal Oversight of Prediction Markets

    North Carolina has become the first U.S. state to formally recognize federal oversight of prediction markets in state law, allowing platforms such as Kalshi and Polymarket to operate legally if they register with the Commodity Futures Trading Commission (CFTC). The change is part of Senate Bill 257, known as Session Law 2026-41, which is included in the state’s roughly $34 billion budget.

    The measure introduces a 6% tax on net revenue from transactions involving North Carolina residents starting January 1, 2027, while eliminating separate state licensing requirements for CFTC-registered operators. This development comes as prediction market platforms continue to defend their operations against legal challenges in several states.

    Budget Creates New Framework for Prediction Markets

    The new law relies on the Commodity Exchange Act, which grants the CFTC exclusive federal regulatory authority over prediction markets. As a result, CFTC-registered operators meet North Carolina’s regulatory requirements without seeking additional state licenses or complying with separate gaming rules.

    Instead, the legislation requires prediction market operators to pay a 6% tax on net revenue earned from North Carolina users starting in 2027. Meanwhile, the same budget raises the sports betting tax to 23% of gross betting revenue from the previous 18%. Licensed sportsbooks also continue to pay a $1 million licensing fee to operate in the state, while prediction market platforms do not face that cost under the new framework.

    Critics have questioned the difference between the tax rates. Mick Mulvaney, who leads Gambling Is Not Investing and previously served as acting White House chief of staff, told Axios that prediction markets operate as unlicensed sports gambling applications. He also argued that the policy could encourage operators to bypass state gambling rules while allowing minors to participate in sports-related markets.

    Lawmakers Weigh Revenue and Industry Impact

    Republican leaders described the measure as recognition of existing market activity. House Speaker Destin Hall said prediction market activity already occurs in North Carolina and that lawmakers decided it was time to address it. Senate leader Phil Berger also commented on the industry’s future but stopped short of predicting whether prediction markets could eventually replace traditional sports betting.

    Some Democrats expressed concerns despite supporting the overall budget. Senator Julie Mayfield warned that sports betting revenue could decline if operators shift toward prediction markets. According to WRAL, North Carolina has collected more than $287 million from sports betting since legalization in March 2024. The report also noted that the University of North Carolina and North Carolina State University may each receive up to $5.8 million annually to support athletic programs.

    Other States Continue Legal Challenges

    Gaming analyst Dustin Gouker wrote in his Next Event Horizon newsletter that North Carolina became the first state to allow CFTC-approved prediction markets without requiring separate state licensing. He described the law as affirming federal oversight while applying a relatively low tax rate and predicted that other states could consider similar legislation.

    Other states have adopted different approaches. Kentucky introduced a 14.25% excise tax in April, prompting legal action from the CFTC. Illinois later approved taxes on betting transactions while maintaining state licensing requirements, after which Kalshi filed a lawsuit.

    Court decisions have also varied. Kalshi secured preliminary injunctions in New Jersey and Tennessee, which the Third Circuit upheld in April. However, the company lost similar cases in Maryland, Nevada, Arizona, Ohio, and recently in New York, where Judge Analisa Torres ruled that Kalshi had not demonstrated a likely success under federal preemption law.

    Kalshi has appealed that decision to the Second Circuit Court of Appeals. Sports law attorney Daniel Wallach said the ruling could affect the company’s remaining legal disputes. Meanwhile, the CFTC has challenged nine states over event contracts, and some legal observers believe the issue could ultimately reach the U.S. Supreme Court.

    North Carolina Attorney General Jeff Jackson also signed an April letter opposing federal regulation, according to Axios. Even so, the state’s budget focuses on taxation while broader legal questions continue in federal courts. A Polymarket spokesperson told Axios that the company follows CFTC rules and expects state regulation efforts to face significant federal preemption challenges.

    What’s Next?

    North Carolina has become the first state to recognize federal oversight of prediction markets through state law. The measure allows CFTC-registered platforms to operate without separate licenses while introducing a 6% tax. Meanwhile, legal disputes over federal authority and state regulation continue across several jurisdictions.

  • Polymarket’s Fake Trading Videos Spark Federal Investigation Amid Record World Cup Volumes

    Polymarket’s Fake Trading Videos Spark Federal Investigation Amid Record World Cup Volumes

    Prediction market platform Polymarket is under increased regulatory scrutiny following reports that it used deceptive influencer campaigns to promote its services. Simultaneously, the company recorded surging trading activity during the 2026 FIFA World Cup, placing it at the intersection of regulatory debate and growing market interest.

    Report Reveals Fabricated Trades and Misleading Content

    A Wall Street Journal investigation alleged that Polymarket paid college-age content creators to produce over 1,100 promotional videos between December 2025 and May 2026. According to the report, the videos showcased fabricated prediction market trades worth approximately $1.9 million, using replica versions of the Polymarket website rather than the live platform. The creators reportedly displayed fake profits of nearly $900,000 while concealing their financial relationship with the company. The staged content gave viewers the impression that large profits were routine, while hiding potential losses that could have exceeded $166,000. Creators were instructed to use imitation websites closely resembling the official Polymarket interface and were told not to disclose payments, making the sponsored content appear as ordinary social media posts.

    Following the investigation, Polymarket launched an internal review of its promotional activities but has not publicly released its findings.

    Lawmakers Call for CFTC Investigation

    Regulatory pressure escalated after U.S. Senators John Curtis and Adam Schiff sent a letter on June 26 requesting the Commodity Futures Trading Commission (CFTC) to investigate Polymarket’s advertising practices. The request focused on whether the campaigns complied with advertising rules. Polymarket has a history with the CFTC: in 2022, it reached a settlement involving a $1.4 million civil penalty and agreed to stop offering services to U.S. users.

    Beyond regulatory agencies, a consumer advocacy group filed a lawsuit in late June against Polymarket and several executives, alleging deceptive advertising targeting college students. Federal authorities are also reportedly examining the company’s marketing activities.

    World Cup Drives Record Trading Volume

    Amid the regulatory attention, prediction markets experienced a surge in trading activity during the 2026 FIFA World Cup. Data from DefiLlama showed that Kalshi generated nearly $9.4 billion in June trading volume, up from about $5.3 billion in May. Polymarket International’s monthly volume rose to roughly $4.3 billion from approximately $3.5 billion. Separate market data indicated even stronger figures, with Kalshi exceeding $30 billion in notional trading volume in June and Polymarket International reaching more than $10.8 billion. Polymarket’s U.S. platform recorded over $3.5 billion in monthly volume.

    Knockout-stage matches attracted heavy participation. Canada’s Round of 16 match against Morocco generated over $48 million in trading volume on Kalshi and more than $26.8 million on Polymarket. U.S. markets also drew millions of dollars in trading activity.

    The rapid growth has coincided with broader regulatory discussions. Nearly a dozen U.S. states have taken action involving platforms such as Kalshi and Polymarket, while European regulators have reminded firms that some event contracts may already fall under existing financial rules. CFTC Chair Michael Selig criticized state enforcement efforts, stating, “To any state that seeks to nullify federal law and seize authority over these markets, we will see you in court.”

    Polymarket’s dual narrative—of regulatory risk and market momentum—underscores the volatile intersection of cryptocurrency, prediction markets, and consumer protection in the digital age.

  • Senate Committee Approves CLARITY Act: What the 15-9 Vote Means for Crypto Regulation

    Senate Committee Approves CLARITY Act: What the 15-9 Vote Means for Crypto Regulation

    The US Senate Banking Committee has taken a major step toward establishing a comprehensive regulatory landscape for cryptocurrencies with a 15-9 bipartisan vote to approve the Digital Asset Market Clarity Act of 2025 (CLARITY Act). The bill seeks to resolve the uncertainty around digital assets by establishing a clear regulatory framework that assigns the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to the different regulatory responsibilities.

    Introduced in May 2025 by House Financial Services Committee Chairman French Hill and House Agriculture Committee Chairman G.T. Thompson, the bill passed the US House of Representatives on July 17, 2025, with a bipartisan vote of 294 to 134. It would be the first full framework of US legislation for cryptocurrencies, exchanges, stablecoins, and decentralized finance (DeFi).

    SEC and CFTC to Share Crypto Oversight

    The CLARITY Act establishes a two-tier regulatory framework, with its classifications of digital assets depending on their attributes. The SEC would have authority over tokens that meet its definition of an “investment contract,” while the CFTC would have jurisdiction over sufficiently decentralized tokens, for example, Bitcoin and perhaps Ethereum.

    Among others, the “mature blockchain test” provides a mechanism by which projects can move from SEC to CFTC regulation once they meet criteria for decentralization. The criteria are based on caps on the concentration of token ownership, open-source development, decentralization of governance, and the utility of the token beyond speculation.

    The CFTC would also have direct authority over digital commodity spot markets for the first time, extending its regulatory jurisdiction.

    New Rules for Exchanges, Stablecoins, and DeFi

    It would mandate that registered and regulated crypto exchanges, brokers and dealers, in most cases, be centrally registered and abide by customer protection, disclosure, anti-money laundering restrictions (AML), Know Your Customer (KYC) and financial reporting requirements with the CFTC.

    The bill improves tax reporting by adding more platforms and expanding the definition of brokers to include additional coverage. The bill also mandates that additional platforms provide Form 1099-DA to users and the Internal Revenue Service (IRS).

    The use of ‘stablecoins,’ one of the most controversial parts of the bill, remains to be discussed. The Senate version allows returns to be based on the activities or transactions, but does not allow returns to be “economically or functionally equivalent” to bank deposit interest. The bill calls for the SEC, CFTC, and US Treasury, within one year, to establish in detail permissible reward structures.

    Meanwhile, the Blockchain Regulatory Certainty Act (BRCA), which was bundled into the CLARITY Act, gives a “carve out” exemption for non-custodial developers, exempting open-source wallet and protocol developers that don’t have access to customers’ assets from some fund transmitter regulations.

    What the Senate Vote Means for Crypto Markets

    In the majority press release, Chairman Tim Scott (R‑SC) framed the markup as a “historic” bipartisan step after nearly a year of negotiations, emphasizing that the legislation is intended to bring clearer rules, stronger safeguards, and a more transparent framework for everyday digital assets market participants.

    Two Democrats, Senators Angela Alsobrooks (D‑MD) and Ruben Gallego (D‑AZ), joined Committee Republicans to support the bill. Senator Alsobrooks also played a leading role in shaping the compromise language on stablecoin yield. However, not everyone in the legislature approves of the original bill. Committee minority staff released a national security advisory arguing that the current draft “fails to address key vulnerabilities” exploited by criminals, terrorists, and foreign adversaries.

    Why This Matters

    The CLARITY Act establishes the first unified US legal framework for crypto, ending years of regulatory confusion. By clearly dividing SEC and CFTC oversight, the bill provides a predictable path for developers while creating vital safeguards for institutional investors and consumers.

    What’s Next?

    After the committee vote of 15-9, Senate Banking and Agriculture Committee staff will combine their respective bills on the crypto market structure and present a single bill for the full Senate to vote on, which will need 60 votes to avoid a filibuster. Should it become law, the CLARITY Act could redefine the US crypto landscape by offering clarity for Bitcoin, Ethereum, exchanges, and institutional investors, while also putting in place better consumer protections and compliance requirements.

    Frequently Asked Questions

    1. What is the CLARITY Act?

    The CLARITY Act (H.R. 3633) is a proposed US law that establishes a comprehensive regulatory framework for cryptocurrencies. It defines how digital assets are classified and which federal regulator oversees them.

    2. Why is the Senate’s 15-9 vote important?

    The bipartisan committee vote advances the bill to the next legislative stage, bringing it closer to becoming law. It also signals growing political support for clear cryptocurrency regulations in the US.

    3. How does the CLARITY Act divide SEC and CFTC oversight?

    The SEC would regulate digital assets classified as investment contracts, while sufficiently decentralized cryptocurrencies, such as Bitcoin and potentially Ethereum, would fall under the CFTC through the “mature blockchain” framework.

    4. What changes would the CLARITY Act bring for crypto exchanges and stablecoins?

    Crypto exchanges, brokers, and dealers would be required to register with the CFTC and comply with AML, KYC, disclosure, and customer protection rules. The bill also introduces clearer regulations for stablecoin rewards and expands crypto tax reporting requirements.

    5. Is the CLARITY Act now a law?

    No. The bill has passed the US House of Representatives and the Senate Banking Committee, but still requires approval by the full Senate before it can be signed into law and implemented by the SEC and CFTC.