TL;DR
- SEC and CFTC advance crypto and prediction market rules.
- Trump administration shifts to clear, industry-friendly crypto regulations.
- New frameworks aim to classify tokens and legalize event contracts.
Two of Washington’s most powerful financial regulators moved in the same direction at the same time. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) each submitted formal regulatory plans to the White House covering cryptocurrency and prediction markets — a coordinated step that marks the most concrete regulatory advance the Trump administration has produced for either industry since taking office.
The submissions landed at the Office of Information and Regulatory Affairs (OIRA), the White House body responsible for reviewing major regulatory actions before they move forward. Getting a plan to OIRA does not mean rules are finalized, but it confirms both agencies treat the matter seriously enough to put formal proposals on paper and send them up the chain of command.
The philosophical distance between the current approach and the one that preceded it is considerable. The Biden administration pursued both industries primarily through enforcement — filing lawsuits, imposing fines, and treating ambiguity as a weapon rather than a problem to solve.
The Trump administration opened with the opposite posture, and the CFTC underscored that shift early by withdrawing a pending proposal that would have banned contracts tied to political and sports events entirely.
Two Agencies, Two Sets of Rules, One Shared Goal
The SEC’s submission centers on what agency chair Paul Atkins describes as a token classification framework. The core problem the framework addresses is one the industry has complained about for years: no clear legal standard determines whether a given digital asset counts as a security under SEC jurisdiction or a commodity under CFTC jurisdiction.
Companies operating in the space faced enforcement actions built on that ambiguity, and investors operated without knowing which rules applied to the assets they held. A formal taxonomy would replace the uncertainty with written criteria, giving both companies and investors a defined compliance path. Atkins framed the goal plainly — people entering the market deserve to know their regulatory obligations before they act, not after they receive a subpoena.
The CFTC’s submission addresses prediction markets, the platforms where users buy and sell contracts tied to real-world outcomes ranging from election results to sports scores. Chair Michael Selig signaled the agency plans to launch a formal rulemaking process, describing the intent as setting clear standards for which event contracts can list and trade legally.
The practical effect would place platforms like Kalshi and Polymarket inside a federal regulatory structure, distinguishing their operations from state-level gambling activity — a distinction several states currently refuse to accept.
The distinction matters enormously for the platforms involved. Billions of dollars in trading volume currently flow through prediction markets whose legal status varies depending on which state’s attorney general happens to be paying attention at any given moment. Federal oversight would create a single compliance standard, but it would also impose market surveillance requirements, client protection rules, and ongoing reporting obligations that conventional gambling sites do not carry.
The Supreme Court’s 2024 Loper Bright ruling curtailed the authority of federal agencies to interpret ambiguous statutes on their own, meaning rules built on agency guidance rather than explicit congressional authorization face real legal exposure.
Atkins acknowledged the limitation directly, stating that the industry ultimately needs statutory certainty that only Congress can provide. Regulatory guidance fills a gap, but courts can overturn it and future administrations can reverse it without going through the full legislative process.
The conflict between federal and state authority adds a second layer of friction, particularly for prediction markets. New York and several other states classify sports event contracts as gambling, subject to state law, and have already issued cease-and-desist orders against platforms the CFTC would prefer to regulate federally. Both jurisdictions claim authority over the same transactions, and no agreement between them currently resolves the overlap.
Federal prosecutors added a third constraint independent of jurisdiction. Officials made clear that prediction markets do not receive immunity from criminal fraud statutes. Anyone who attempts to manipulate an underlying event to profit from a related contract — fixing an election, influencing a game outcome — faces prosecution regardless of what the CFTC’s new rules say about the contracts themselves.
