• Hayden Adams, CEO, Uniswap Labs
• Brian Armstrong, CEO, Coinbase
• Shayne Coplan, CEO, Polymarket
• Brad Garlinghouse, CEO, Ripple
• Luke Hoersten, CEO, Bitnomial
• Tarek Mansour, CEO, Kalshi
• Kris Marszalek, CEO, Crypto.com
• Nathan McCauley, CEO, Anchorage Digital
• Peter Mintzberg, CEO, Grayscale
• Sergey Nazarov, CEO, Chainlink Labs
• Arjun Sethi, Co CEO, Kraken
• Peter Smith, CEO, Blockchain.com
• Tyler Winklevoss, CEO, Gemini
• Anatoly Yakovenko, CEO, Solana Labs
• Andrej Bolkovic, CEO, Options Clearing Corporation
• Thomas Chippas, CEO, Rothera Markets
• Professor Harry Crane, Representative
• Chris Dixon, General Partner, a16z Crypto
• Craig Donohue, CEO, Cboe Global Markets
• Terry Duffy, Chair and CEO, CME Group
• Tom Farley, CEO, Bullish
• Adena Friedman, Chair and CEO, Nasdaq
• Christian Genetski, President, FanDuel
• Frank LaSalla, President and CEO, Depository Trust and Clearing Corporation
• Walt Lukken, CEO, FIA
• Scott D. O’Malia, CEO, ISDA
• Alana Palmedo, Managing Partner, Paradigm
• Vivek Raman, CEO, Etherealize
• Professor Carla Reyes, Representative
• Jason Robins, CEO, DraftKings
• David Schwimmer, CEO, LSEG
• Vance Spencer, Co founder, Framework Ventures
• Jeff Sprecher, CEO, Intercontinental Exchange
• Vlad Tenev, CEO, Robinhood
• Don Wilson, CEO, DRW

 

 

Polymarket has gone on the offensive.

 

The crypto-powered prediction market has filed a federal lawsuit against the state of Massachusetts, arguing that state regulators are overstepping their authority as they move to block sports-related prediction markets. The case puts Polymarket on a collision course with state gambling laws and could determine how far U.S. states can go in policing a fast-growing corner of crypto-finance.

 

At stake is a much bigger question than one company’s business model. The lawsuit tests whether prediction markets should be treated as federally regulated financial instruments or as another form of sports betting that states can license, restrict, or ban outright.

 

 

A Growing Clash Between States and Prediction Markets

Prediction markets allow users to trade on the probability of future events. Elections, economic data releases, interest rate decisions, and increasingly, sports outcomes. Traders buy and sell contracts that pay out based on what actually happens, with prices shifting in real time as sentiment changes.

 

Supporters argue these markets are closer to financial derivatives than gambling. Critics, especially state regulators, say sports-based contracts look and feel like wagers, regardless of how they are structured.

 

That tension has been simmering for years, but it boiled over recently when Massachusetts moved to shut down Kalshi’s sports-related markets. Kalshi operates as a federally regulated exchange under the Commodity Futures Trading Commission, yet a Massachusetts court sided with the state, granting regulators the power to block those contracts locally.

 

For Polymarket, that ruling was a warning shot.

 

 

Why Massachusetts Matters

Massachusetts has become ground zero for the state-level pushback. The state’s attorney general has argued that sports prediction contracts violate local gambling laws and should not be allowed without a state-issued license. Courts have so far been receptive to that argument, at least on an interim basis.

 

The implications extend far beyond one state. Regulators in Nevada and other jurisdictions have cited the Massachusetts case as justification for their own enforcement actions. If one state can successfully reclassify prediction markets as gambling, others are likely to follow.

 

Polymarket’s lawsuit is designed to stop that domino effect.

 

 

Polymarket’s Core Argument

Polymarket’s legal case is straightforward and ambitious.

 

The company argues that event-based contracts fall squarely under federal commodities law and that the CFTC has exclusive authority to regulate them. If that view holds, states would be barred from using gambling statutes to restrict or ban prediction markets, even when those markets involve sports.

 

In other words, Polymarket is asking the court to draw a hard line between federally regulated markets and state gambling oversight.

 

The lawsuit also reflects a strategic shift. Rather than waiting for a cease-and-desist or injunction, Polymarket is preemptively seeking judicial clarity before Massachusetts or other states can formally block its offerings.

 

 

Sports Markets Are the Flashpoint

Sports contracts sit at the center of the controversy for a reason. Unlike political or economic forecasts, sports betting is already heavily regulated at the state level, with billions in tax revenue flowing through licensed sportsbooks.

 

State officials argue that prediction markets offering contracts on game outcomes undermine that system and create an unlicensed alternative to traditional betting.

 

Prediction market operators counter that their products are fundamentally different. Prices are set by traders, not oddsmakers. Positions can be bought and sold before outcomes are known. Risk is distributed across a market, not absorbed by a house.

 

Courts have not yet settled which interpretation carries more weight.

 

 

The Broader Stakes for Crypto and Finance

The outcome of Polymarket’s lawsuit could shape the future of prediction markets in the U.S. If states prevail, platforms may be forced to geo-block large portions of the country or abandon sports contracts entirely. That would likely slow growth and limit mainstream adoption.

 

If Polymarket wins, it could establish a powerful precedent. Federal preemption would give prediction markets a clearer regulatory runway and could encourage more institutional participation in event-based trading.

 

There is also a competitive angle. Traditional sportsbooks operate under state licenses and strict compliance regimes. Prediction markets that fall outside those systems could disrupt the sports betting industry, which has expanded rapidly since the repeal of PASPA.

 

 

The Bottom Line

The case is still in its early stages, but the direction is clear. Prediction markets are no longer operating in a gray area that regulators are willing to ignore.

 

As states push back and platforms respond with federal lawsuits, the U.S. is heading toward a defining legal moment for event-based markets. Whether they end up regulated like derivatives or treated like gambling will determine not just where these platforms can operate, but what kind of products they can offer at all.

 

For now, Polymarket has drawn its line. The courts will decide how far states can go in crossing it.

 

The White House is preparing to bring crypto executives and banking leaders into the same room again, a sign that Washington’s long running fight over how to regulate digital assets has reached another pressure point.

 

According to reporting citing Reuters, senior figures from the crypto industry and the banking sector are expected to meet with White House officials in early February to discuss a market structure bill that has recently hit a wall in Congress. The meeting comes at a moment when lawmakers have already locked in a stablecoin framework, but cannot seem to agree on the bigger question of who regulates crypto markets and how.

 

Market structure may sound abstract, but it is the foundation of everything else. It determines which agency has authority, how tokens are classified, how exchanges register, and whether new products are built in the United States or somewhere else.

 

The fact that the White House is stepping in suggests the administration believes the debate has moved beyond talking points and into the phase where compromises need to be made, especially between banks and crypto firms that see the future very differently.

 

Why this meeting matters now

When the White House convenes both sides of a financial policy fight, it usually means the normal legislative process is struggling. That is exactly what is happening with crypto market structure.

 

Congress made real progress last year by passing a federal stablecoin law. That victory raised expectations across the industry that broader rules for exchanges, tokens, and decentralized finance would be next. Instead, lawmakers have found themselves bogged down in disagreements that are harder to paper over.

 

At a high level, everyone says they want clarity. In practice, clarity means deciding winners and losers.

 

Banks want to make sure crypto products do not look or behave like deposits without being regulated like deposits. Crypto firms want rules that let them list assets, offer yield, and build new protocols without constant fear of enforcement actions. Regulators want authority that actually matches how the market works.

 

Those goals collide most directly in market structure legislation, which is why it has become the most contentious piece of crypto policy in Washington.

 

 

Where the bill stands today

The House has moved, the Senate is stuck

 

The House of Representatives has already passed a sweeping market structure bill that lays out a framework for classifying digital assets and dividing oversight between the SEC and the CFTC. The basic idea is simple. Tokens that function like securities fall under the SEC. Tokens that operate more like commodities fall under the CFTC, including spot market oversight.

 

That approach has strong support in the crypto industry because it offers a path to compliance that does not rely on years of litigation.

 

The Senate, however, is a different story. Jurisdiction is split between the Banking Committee and the Agriculture Committee, which oversees the CFTC. Each committee has released its own drafts, and neither side has a clear path to unifying them.

 

Markups have been delayed. Amendments are piling up. And the clock is ticking as lawmakers turn their attention to other priorities.

 

Stablecoin rewards have become the flashpoint

One of the biggest reasons the bill is stalled is stablecoin yield.

 

Even though stablecoins already have their own law, they still sit at the center of the market structure debate because they touch the banking system directly. The most controversial issue is whether stablecoins should be allowed to offer rewards simply for being held.

 

From the banking perspective, yield bearing stablecoins look uncomfortably close to deposits. Banks argue that if a token offers a return and can be redeemed at par, it competes with insured deposits without being subject to the same rules.

 

From the crypto side, rewards are seen as a feature, not a loophole. Many firms argue that stablecoins backed by cash and short term Treasurys are fundamentally different from bank liabilities, and that banning rewards would freeze innovation and entrench incumbents.

 

Some Senate drafts have tried to split the difference by restricting passive yield while allowing activity based incentives. That compromise has not satisfied everyone, which is why the issue keeps resurfacing.

 

This is also where a White House meeting could make a difference. Any bill that passes will need language banks can accept and crypto firms can actually use.

 

 

DeFi is the second unresolved battle

Decentralized finance is the other major fault line.

 

Lawmakers and regulators agree that DeFi cannot exist entirely outside the law. They disagree on how to draw the boundary. Some Senate proposals push Treasury to define compliance obligations for DeFi platforms, including disclosures and recordkeeping requirements.

 

The challenge is obvious. If the rules treat software like a traditional intermediary, developers will leave or go dark. If the rules are too permissive, lawmakers worry about money laundering, sanctions evasion, and consumer harm.

 

So far, no draft has solved this cleanly. The result is cautious, sometimes vague language that satisfies no one and invites future fights.

 

 

The SEC versus CFTC question is still unresolved

At its core, market structure is about classification.

 

Is a token a security, a commodity, something else, or some hybrid category that does not fit neatly into existing law? That answer determines which regulator takes the lead and how companies design their products.

 

Some Senate drafts introduce concepts like network tokens or ancillary assets to bridge the gap between traditional securities and decentralized systems. These ideas are meant to reduce uncertainty, but they also raise new questions about enforcement and interpretation.

 

For exchanges, custodians, and issuers, this is not academic. Classification determines what can be listed, how staking works, and whether certain products are viable in the US at all.

 

 

The Bottom Line

I am generally positive on the White House holding this meeting. At a minimum, it acknowledges what everyone in the industry already knows, which is that market structure is stuck and normal committee process is not getting it unstuck.

 

Getting banks and crypto firms in the same room matters, even if no one walks out with a breakthrough headline. These conversations tend to shape the edges of legislation more than the core, but in a bill this complex, the edges are often where everything breaks.

 

That said, expectations should stay grounded. A single meeting is not going to magically resolve the stablecoin yield debate, redraw the DeFi compliance perimeter, or settle the SEC versus CFTC turf war. Those fights are structural and political, and they will take time.

 

If anything meaningful comes out of this, it will likely show up quietly in revised draft language weeks from now, not in a press release the next day.

 

Still, the fact that the White House is leaning in is a good sign. It suggests there is real pressure to get something done, and an understanding that half measures or endless delay are no longer acceptable. For an industry that has spent years asking Washington to engage seriously, that alone is progress, even if the final outcome remains very much in flux.

 

Washington’s long-running effort to write clear rules for crypto is moving forward, but not cleanly.

 

The U.S. Senate has released updated language for a long-anticipated crypto market structure bill, yet deep disagreements remain between lawmakers, committees, and the industry itself. Two separate Senate committees are now pushing different versions of the legislation, and the gaps between them are proving harder to close than many expected.

 

At stake is nothing less than who regulates crypto in the United States, how stablecoins are allowed to operate, and whether decentralized finance can exist without being squeezed into a framework built for Wall Street.

 

A Bill That Is Really Two Bills

The market structure effort is split between the Senate Agriculture Committee and the Senate Banking Committee, each advancing its own vision of how digital assets should be governed.

 

The Agriculture Committee’s draft leans heavily toward expanding the authority of the Commodity Futures Trading Commission. Under this approach, most major cryptocurrencies would be treated as digital commodities, placing them largely outside the Securities and Exchange Commission’s reach.

 

The Banking Committee’s version, often referred to as the CLARITY Act, takes a more cautious and detailed approach. It attempts to draw clearer legal lines between what counts as a security and what does not, while preserving a significant role for the SEC in overseeing parts of the crypto market.

 

Both sides say they want regulatory certainty. The problem is they disagree on what that certainty should look like.

 

The CFTC Versus SEC Fight Is Still the Core Issue

At the heart of the debate is a familiar Washington turf war.

 

Supporters of the Agriculture Committee draft argue that the CFTC is better suited to oversee crypto markets, particularly spot trading for assets like Bitcoin and Ethereum. They point to the agency’s lighter touch, its experience with commodities, and its closer alignment with how crypto markets actually function.

 

The Banking Committee sees things differently. Its members are more focused on investor protection and worry that shifting too much power to the CFTC could weaken oversight. Their draft tries to preserve the SEC’s role, especially when tokens are issued in ways that resemble traditional securities offerings.

 

Neither side appears ready to fully back down, which is why the Senate still has not settled on a single unified bill.

 

Stablecoins Become a Flashpoint

Stablecoins, once seen as the least controversial corner of crypto, are now one of the most contentious parts of the bill.

 

One major sticking point is a proposed restriction on stablecoin rewards or yield. Under the Banking Committee’s draft, issuers would face limits on paying users simply for holding stablecoins.

 

Crypto companies argue this would kneecap a core feature of digital dollars and make them less competitive with traditional financial products. Some in the industry say the provision feels less like consumer protection and more like an attempt to shield banks from competition.

 

Lawmakers defending the restriction say they are trying to prevent stablecoins from morphing into unregulated interest-bearing products that could pose risks to consumers and the broader financial system.

 

The disagreement has become symbolic of a larger divide over how much freedom crypto should have to innovate inside a regulated framework.

 

DeFi Still Does Not Fit Neatly Anywhere

Decentralized finance remains one of the hardest issues for lawmakers to solve.

 

Both Senate drafts struggle with how to treat protocols that do not have a central company, executive team, or traditional governance structure. Some lawmakers want stronger rules to prevent DeFi platforms from being used for illicit activity. Others worry that applying centralized compliance models to decentralized systems will effectively ban them.

 

For now, DeFi remains an unresolved problem in the bill, with language that critics say is either too vague or too aggressive, depending on who you ask.

 

Coinbase Draws a Line in the Sand

Industry frustration boiled over when Coinbase publicly withdrew its support for the Banking Committee’s draft.

 

The exchange called the proposal worse than the status quo, pointing to its treatment of DeFi, stablecoin yield restrictions, and limits on tokenized equities. Coinbase’s criticism carried weight in Washington and contributed to the Banking Committee delaying its planned markup hearing.

 

That delay rippled through the market, briefly weighing on crypto prices before sentiment stabilized.

 

Timing Gets Complicated

The Agriculture Committee is moving ahead more quickly, scheduling a markup hearing to debate amendments and advance its version of the bill.

 

The Banking Committee, meanwhile, has pushed its timeline back as lawmakers juggle other priorities, including housing legislation. That has pushed any meaningful progress into late winter or early spring at the earliest.

 

The longer the process drags on, the more uncertain the path becomes. Election season is approaching, and legislative calendars tend to tighten as political pressure increases.

 

A Broader Regulatory Backdrop Is Already in Place

The market structure debate is happening against a backdrop of recent regulatory action.

 

Congress has already passed stablecoin legislation that sets rules around reserves, disclosures, and audits. Earlier House efforts, including last year’s market structure bill, also laid groundwork by outlining how digital assets might be classified under federal law.

 

What the Senate is trying to do now is connect those pieces into a comprehensive framework. That has proven easier said than done.

 

The Next Test

The next major test will be whether the Agriculture and Banking Committees can reconcile their differences or whether one version gains enough momentum to dominate the process.

 

Expect heavy lobbying from crypto companies, financial institutions, and trade groups, particularly around stablecoin yield, DeFi protections, and agency jurisdiction.

 

For now, the Senate’s crypto market structure bill remains a work in progress, ambitious in scope, politically fragile, and still very much unsettled.

 

One thing is clear. The era of regulatory ambiguity is ending, even if the final shape of crypto regulation in the U.S. is still being fought over line by line.

 

When Michael Selig stepped into the role of CFTC chair late last year, the crypto industry was already expecting a change in tone. This week, it got confirmation.

 

On January 20, Selig announced the launch of the CFTC’s new “Future-Proof” initiative, a program designed to rethink how U.S. markets regulate crypto, digital assets, and other fast-moving financial technologies. The message was clear. The old approach is no longer enough.

 

Rather than relying on enforcement actions and retroactive interpretations of decades-old rules, the CFTC wants to build regulatory frameworks that actually reflect how these markets function today.

 

For an industry that has spent years navigating uncertainty, that alone is a notable shift.

 

A Chair With Deep Crypto Roots

Selig is not new to crypto regulation. Before taking the top job at the CFTC, he worked closely with digital asset policy at the SEC and spent time in private practice advising both traditional financial firms and crypto companies. He also previously clerked at the CFTC, giving him an unusually well-rounded view of how regulators and markets interact.

 

That background shows up in his public comments. Since taking office, Selig has repeatedly emphasized predictability, clarity, and rules that market participants can actually follow without guessing how an agency might interpret them years later.

 

The Future-Proof initiative is the clearest expression of that philosophy so far.

 

What “Future-Proof” Really Means

At its core, Future-Proof is about moving away from improvisation. The CFTC wants to stop forcing novel digital products into regulatory boxes built for traditional derivatives and commodities.

 

Instead, the agency plans to pursue purpose-built rules through formal notice-and-comment processes. That means more upfront guidance and fewer surprises delivered through enforcement actions.

 

Selig has described the goal as applying the minimum effective level of regulation. Enough oversight to protect markets and participants, but not so much that innovation is choked off before it has a chance to mature.

 

For crypto firms, that approach could offer something they have long asked for but rarely received, which is regulatory certainty.

 

Why the Industry Is Paying Attention

The timing matters. Crypto markets are more institutional than they were even a few years ago. Large asset managers, trading firms, and infrastructure providers want clearer rules before committing serious capital. Uncertainty around jurisdiction and compliance has been one of the biggest obstacles.

 

If the CFTC follows through, Future-Proof could help define how derivatives, spot markets, and emerging products like prediction markets are treated under U.S. law. That would make it easier for firms to build, invest, and operate without constantly second-guessing regulators.

 

At the same time, clarity cuts both ways. More defined rules could also raise the bar for compliance, especially for smaller startups and decentralized platforms that have operated in legal gray zones.

 

 

Tennessee Attempts to Block Prediction Markets

 

 

A Broader Political Shift

Selig’s initiative does not exist in isolation. It comes as lawmakers in Washington continue debating how to split crypto oversight between the CFTC and the SEC. Several proposed bills aim to draw clearer lines around digital commodities and spot market regulation, potentially expanding the CFTC’s role.

 

Future-Proof appears designed to fit neatly into that broader push. If Congress hands the agency more authority, the CFTC wants to be ready with frameworks that can scale.

 

Still, challenges remain. The commission currently lacks a full slate of confirmed commissioners, raising questions about how durable these policy shifts will be. Coordination with the SEC is another open issue, especially where token classifications blur the line between securities and commodities.

 

What Does The Future Hold?

For now, Future-Proof is more direction than destination. The real test will be how quickly the CFTC turns principles into actual rules, and whether those rules survive political change and legal scrutiny.

 

But the tone alone represents a meaningful break from the past. After years of regulation by enforcement and ambiguity, the agency is signaling that crypto markets are not a temporary problem to be contained, but a permanent part of the financial system that deserves thoughtful governance.

 

Whether that vision becomes reality will shape the next phase of U.S. crypto regulation, and potentially determine whether innovation stays onshore or continues looking elsewhere.

 

 

 

Tennessee Orders Kalshi, Polymarket, and Crypto.com to Halt Sports Prediction Contracts

 

Tennessee regulators have ordered Kalshi, Polymarket, and Crypto.com to immediately stop offering sports-related prediction contracts to residents of the state, escalating a growing conflict between state gambling authorities and federally regulated prediction markets.

The Tennessee Sports Wagering Council issued cease-and-desist orders on January 9, demanding that the three platforms halt all sports event contracts, void any open positions tied to Tennessee users, and refund customer funds by the end of the month.

State officials argue the products function as unlicensed sports betting under Tennessee law, regardless of how the companies describe them.

The move places Tennessee alongside a growing list of states pushing back against prediction markets that allow users to trade contracts based on the outcomes of sporting events, elections, or real-world events. While the platforms frame these products as financial instruments, state regulators increasingly see them as gambling by another name.

 

What Tennessee Is Demanding

According to the orders, Kalshi, Polymarket, and Crypto.com must immediately cease offering sports contracts to Tennessee residents. Any existing sports-related contracts must be canceled, and all funds deposited by users in the state must be returned by January 31.

Failure to comply could expose the companies to civil penalties, injunctions, and possible criminal enforcement under Tennessee’s sports gaming laws.

The council’s position is straightforward. If money is being risked on the outcome of a sporting event, the state considers it sports wagering, which requires a license, tax payments, and adherence to consumer protection rules.

 

The Regulatory Fault Line

At the heart of the dispute is a long-running jurisdictional battle between state gambling regulators and the federal framework governing derivatives and commodities trading.

Kalshi and Polymarket operate under federal oversight tied to commodities regulation, and Crypto.com has positioned its event contracts as a similar financial product. The companies argue that their platforms fall outside traditional sports betting laws and should be regulated at the federal level.

Tennessee, like several other states, rejects that argument. State officials maintain that federal oversight does not override state authority when it comes to gambling conducted within state borders.

This disagreement has become one of the most contentious regulatory issues facing crypto-adjacent markets in the U.S.

 

A Pattern Across the States

Tennessee’s action is not an isolated case. Over the past year, multiple states have issued warnings or cease-and-desist orders targeting prediction markets tied to sports outcomes. Recently, Coinbase filed suit against Connecticut, Michigan, and Illinois. Those states argue that Coinbase's prediction markets amount to illegal gambling and are attempting to ban them there.

Gaming regulators in states such as Nevada, New Jersey, Maryland, Ohio, and Illinois have raised similar concerns, arguing that prediction markets undermine state-regulated sports betting ecosystems while avoiding licensing requirements and taxes.

In some cases, platforms have pulled back voluntarily. In others, companies have opted to fight.

Kalshi has already challenged similar enforcement actions in court, arguing that state gambling laws are being improperly applied to federally regulated markets. The outcome of those cases could shape the future of prediction markets nationwide.

 

Why States Are Pushing Back Now

State regulators say the issue is not just about definitions, but about consumer protection and regulatory consistency.

Licensed sportsbooks are required to meet strict standards related to age verification, responsible gambling tools, fund segregation, and auditing. States argue that prediction markets offering sports contracts operate outside those guardrails while competing for the same customers.

There is also growing concern that prediction markets blur the line between financial trading and gambling in ways existing laws were never designed to address.

For regulators, allowing these products to operate unchecked could weaken the authority of state gaming frameworks that were carefully built following the legalization of sports betting.

 

What Happens Next

The Tennessee order adds new pressure on Kalshi, Polymarket, and Crypto.com at a time when prediction markets are expanding rapidly and attracting increased attention from both traders and policymakers.

The companies could comply and exit the state, challenge the order in court, or push for clearer federal guidance that limits states’ ability to intervene.

Until that happens, the industry remains stuck in a regulatory gray zone, where legality depends less on federal approval and more on how individual states choose to interpret decades-old gambling laws.

 

For crypto-linked prediction markets, Tennessee’s action is another reminder that regulatory risk in the U.S. remains fragmented, unpredictable, and increasingly aggressive.

What Is The CLARITY Act and Why It Is So Important

 

If you have spent any real time building, trading, or working in crypto in the U.S., you already know the pattern. The rules are never fully clear. Guidance usually comes after the fact. And “compliance” often feels less like a checklist and more like a guessing game.

That is the environment the Digital Asset Market Clarity Act, better known as the CLARITY Act, is trying to change.

On January 15, 2026, the Senate Banking Committee is scheduled to hold a critical markup session on the bill. That might sound like inside-baseball legislative procedure, but it is not. A markup is where lawmakers decide what a bill really is. Language gets tightened. Loopholes get closed or widened. Entire sections can disappear.

For crypto, this is one of those moments where the future shape of U.S. regulation is actually being decided.

 

The problem CLARITY is trying to solve

Right now, crypto regulation in the U.S. is reactive.

The laws that exist were written long before blockchains, tokens, or decentralized networks. Regulators have mostly tried to force crypto into frameworks that were never designed for it, often relying on enforcement actions to define the rules retroactively.

CLARITY is an attempt to stop doing that.

The bill starts from a simple premise: not everything in crypto is the same, so it should not all be regulated the same way.

Launching a token to fund a network is not the same as trading that token years later. Writing open-source code is not the same as holding customer funds. Running a wallet is not the same as running an exchange.

Those distinctions sound obvious inside the industry. CLARITY tries to make them explicit in law.

 

Tokens are not frozen in time

One of the most important ideas in the bill is that a token’s legal treatment should not be locked forever to how it was first sold.

Under the current system, if a token was ever distributed in a way that looks like fundraising, it can carry securities risk indefinitely. Even if the network decentralizes. Even if the original team steps away. Even if the token functions more like a commodity than an investment.

CLARITY tries to separate:

• The initial transaction, which may look like an investment contract

• The token itself, once it is broadly distributed and actively used

That distinction matters because it opens the door to secondary markets operating without constant legal uncertainty, while still keeping guardrails around early fundraising.

 

What “mature blockchain” actually means

To make that transition possible, CLARITY introduces the concept of a mature blockchain system.

Stripped of legal language, the question is pretty straightforward: does anyone actually control this thing?

If a small group can still unilaterally change the rules, supply, or governance, regulators get more leverage. If control is meaningfully distributed and no one actor is calling the shots, the regulatory burden can ease.

The bill creates a certification process around this idea, with a defined window for regulators to challenge a claim of maturity.

This is one of the most debated sections of the bill. It is also one of the most important. The standard has to be real, but it also has to be achievable. Senate changes here could dramatically affect how useful the bill ends up being.

 

How token launches could work going forward

CLARITY does not remove oversight from token launches. Instead, it tries to make that oversight fit reality.

The bill allows certain token offerings to proceed under an exemption, but only with meaningful disclosures. Projects would need to explain things like:

• How token supply and issuance work

• What rights, if any, token holders have

• How governance actually functions in practice

• What the project plans to build and what risks exist

The shift here is away from clever legal gymnastics and toward plain-English transparency. For founders, that could mean fewer surprises and a clearer sense of what is expected.

 

Why exchanges are watching this so closely

For U.S. crypto exchanges, CLARITY is largely about secondary markets.

Today, listing a token can feel risky even if that same asset trades freely outside the U.S. The legal line between primary fundraising and secondary trading has never been cleanly drawn.

CLARITY tries to draw that line. If it holds, exchanges would finally have a framework designed specifically for spot crypto markets, instead of trying to fit into rules written for something else.

 

A bigger role for the CFTC

Another major shift is regulatory jurisdiction.

CLARITY gives the CFTC clear authority over spot markets for digital commodities, not just derivatives. It also creates new registration paths for exchanges, brokers, and dealers that are tailored to how crypto markets actually function.

Importantly, the bill pushes for speed. It directs the CFTC to create an expedited registration process, acknowledging that waiting years for clarity is not realistic in fast-moving markets.

 

DeFi, software, and where things get tricky

DeFi is where the bill walks a tightrope.

CLARITY says that people should not be treated as regulated intermediaries just for building or maintaining software, running nodes, providing wallets, or supporting non custodial infrastructure. It also makes clear that participating in certain liquidity pools, by itself, should not automatically trigger exchange-level regulation.

At the same time, fraud and manipulation laws still apply.

Supporters see this as long overdue recognition that infrastructure is not the same as custody or brokerage. Critics worry about edge cases, especially where front ends, admin controls, or governance tokens blur the lines.

This is an area where Senate edits could have outsized impact.

 

Federal rules versus state rules

The bill also leans toward stronger federal oversight and narrower state-by-state requirements in certain areas.

For companies, that means fewer conflicting regimes and lower compliance friction. For critics, it raises concerns about losing fast-moving state enforcement in an industry that still sees its share of bad actors.

That tension is not going away, and it will likely surface again during markup.

 

Self custody, explicitly protected

One of the clearest statements in CLARITY is its protection of self custody.

The bill explicitly affirms the right to hold your own crypto and transact peer to peer for lawful purposes. In an environment where indirect restrictions have been a constant fear, putting this into statute is not symbolic. It is structural.

 

Developers get some breathing room

CLARITY also addresses a long-running concern among builders.

The bill says that non-controlling developers and infrastructure providers should not be treated as money transmitters simply for writing code or publishing software, as long as they do not control user funds or transactions.

For many developers, this removes a quiet but persistent legal cloud that has hung over the industry.

 

Why January 15 is such a big deal

The January 15 markup is where all of this either becomes real or starts to unravel.

This is where lawmakers decide how strict the maturity standards are, how wide the DeFi exclusions go, how much authority regulators actually get, and whether the bill delivers usable clarity or just new gray areas.

If CLARITY moves forward in a recognizable form, it becomes the most serious attempt yet to give crypto a durable U.S. market structure. If it does not, the industry likely stays where it is now, building first and hoping the rules catch up later.

 

How you can get involved?

This is also the moment where voices outside Washington still matter.

Lawmakers are actively weighing feedback. Staffers are reading messages. Offices are tracking where their constituents stand. Silence gets interpreted as indifference, and indifference makes it easier for complex bills to stall or be watered down.

If you believe crypto should have clear rules instead of enforcement-by-surprise, this is the time to say so.

That means contacting your representatives. Find out who your representative is and where they stand on crypto policy. Tell them that market structure clarity matters. Explain why builders, users, and businesses need predictable rules to stay in the U.S. Explain why self custody, open infrastructure, and lawful innovation should be protected, not pushed offshore.

 

It also means supporting organizations that are trying to organize that voice.

One such organization is Rare PAC, a political action committee advocating for regulatory clarity, innovation, and economic opportunity powered by decentralized technologies. Rare PAC works to ensure that the United States remains a global leader in those decentralized technologies and supports candidates who are committed to building A Crypto Forward America.

 

Bills like CLARITY do not pass or fail in a vacuum. They pass because people show up, speak up, and make it clear that getting this right matters.

 

January 15 is not the end of the process, but it is one of the moments that will shape everything that comes after.

2025 Was the Year Crypto Regulation in the US Finally Grew Up

For years, crypto regulation in the United States felt stuck in a loop. Regulators argued over definitions. Courts weighed in after the fact. Companies tried to guess how existing rules might be applied to new technology. Progress was slow, uneven, and often reactive.

In 2025, something changed.

Instead of debating what crypto is, lawmakers and regulators began focusing on how crypto markets actually function. The shift was not loud or dramatic, but it was meaningful. And it made 2025 one of the most consequential years for U.S. crypto regulation so far.

 

From Debate to Infrastructure

The defining feature of crypto regulation in 2025 was its practicality.

Regulators spent the year tackling questions that are not especially flashy but matter enormously for market growth. Who is allowed to issue a digital dollar. What backs a stablecoin in real terms. How quickly exchange traded products can be approved. What custody looks like when ownership is defined by control of a private key.

These are not philosophical debates. They are infrastructure decisions. And infrastructure is what determines whether a market stays niche or becomes part of the financial system.

That shift did not mean regulators became more permissive. It meant they became more operational.

 

A Fragmented System, With Clearer Edges

The U.S. regulatory structure remains fragmented. Congress sets the legal framework, but oversight is split across agencies.

• The Securities and Exchange Commission oversees securities markets.
• The Commodity Futures Trading Commission regulates commodities and derivatives.
• The Internal Revenue Service governs tax treatment.
• Banking regulators supervise insured institutions and their subsidiaries.

That structure did not change in 2025. A single digital asset can still fall under multiple regimes depending on how it is traded, marketed, custodied, or used.

What did change is that the parts of crypto that intersect most directly with traditional finance began to get clearer boundaries and processes.

 

Stablecoins Became a Federal Issue

The most significant development of the year was the passage of the GENIUS Act, which established the first federal framework for payment stablecoins in the United States.

Before this law, stablecoins largely operated under state level money transmission rules or informal regulatory expectations. Issuers relied on disclosures and attestations. Banks stayed cautious, unsure how supervisors might view their involvement.

The new framework set expectations around who can issue payment stablecoins, how reserves must be held, and how redemption works under supervision. In practical terms, it began to treat stablecoins less like an experiment and more like financial infrastructure.

That matters because stablecoins sit at the center of crypto trading, payments, and settlement. Clear federal rules make it easier for banks and regulated firms to engage without risking regulatory surprises.

 

Investment Products Got More Predictable

Crypto investment products also moved forward.

The SEC approved generic listing standards for certain commodity based trust products. That change reduced the need for one off negotiations for every new exchange traded product and made approval timelines more predictable.

Predictability may not generate headlines, but it changes behavior. It lowers legal costs, shortens timelines, and makes firms more willing to launch products beyond the most obvious ones. It also makes advisers and institutions more comfortable allocating capital through standardized structures.

Tax treatment improved as well. The IRS introduced a staking safe harbor for certain trust structures, allowing proof of stake assets to generate yield without automatically breaking tax classification. That adjustment brought tax rules closer to how these networks actually operate.

 

Custody Finally Moved Into Focus

Custody has long been one of crypto’s most difficult issues.

Traditional finance is built around regulated custodians, clear chains of control, and established customer protection rules. Crypto does not fit neatly into that model, since control is defined by private keys rather than physical possession or centralized records.

In late 2025, regulators began addressing this gap more directly. The SEC provided guidance on how broker dealers should approach custody of crypto asset securities. Banking regulators outlined how institutions could apply to issue stablecoins through supervised subsidiaries.

These steps did not eliminate complexity, but they replaced ambiguity with process. In regulated markets, that distinction is crucial.

 

What Was Left Unfinished

Not everything was resolved.

The largest unresolved issue remains market structure, particularly the line between SEC and CFTC jurisdiction. The Digital Asset Market Clarity Act advanced in Congress but did not become law in 2025. That uncertainty continues to influence how companies list tokens and design compliance programs.

Still, the fact that market structure legislation remained active suggests the debate has moved from whether crypto should be regulated to how best to finish the framework.

 

Why 2025 Mattered

Most of the regulatory changes in 2025 were not about enforcement actions or penalties. They were about building rules that allow institutions to participate without improvisation.

Stablecoins gained a federal framework. Investment products became more standardized. Custody moved closer to supervision rather than theory.

Taken together, these steps made crypto look less like a legal edge case and more like emerging financial infrastructure.

 

Looking Ahead

If 2025 was about laying groundwork, 2026 will be about implementation.

The next phase will involve rulemaking, supervision, and real world deployment. Stablecoin issuers will apply for licenses. Banks will test new payment rails. Product sponsors will launch under clearer standards.

The momentum from 2025 created something the U.S. crypto market has lacked for years: a sense that the rules, while still evolving, are becoming legible.

 

That may not satisfy everyone. But for a market that thrives on scale, clarity is often more valuable than certainty.

 

Where the Conversation Continues

For anyone trying to understand where crypto regulation and policy are actually headed, these conversations are no longer abstract. They are happening in real time, often face to face.

That is part of what makes Rare Evo stand out.

Rare Evo takes place July 28-31, 2026, in Las Vegas at The ARIA Resort & Casino, and has become one of the premier industry event where regulators, policymakers, and blockchain builders share the same room. It is not just a conference about price action or product launches. It is a place to hear directly from the people shaping policy, alongside the teams building the technology those policies will govern.

Panels and discussions at Rare Evo tend to focus on how regulation works in practice, what regulators are actually thinking, and how the industry can engage constructively rather than reactively. For anyone serious about long term adoption, it is one of the more valuable rooms to be in.

You can learn more about the event and purchase tickets at https://rareevo.io/buy-tickets

 

Alongside that conversation is the role of Rare PAC.

Rare PAC focuses on supporting policymakers who understand digital assets and who are willing to engage seriously with the work of building clear, workable rules in the United States. It is not about opposing regulation. It is about avoiding regulation by confusion or enforcement after the fact.

As 2026 approaches, the progress made in 2025 will only matter if it is protected and extended. That requires continued participation, education, and engagement from people who care about the future of crypto in the US.

For those interested in learning more or getting involved, information is available at https://rarepac.io

 

If 2025 was the year crypto regulation became practical, the next phase will depend on whether that momentum is carried forward. Conversations like the ones at Rare Evo, and efforts like Rare PAC, are part of how that happens.

Coinbase has sued Connecticut, Michigan, and Illinois today, but it does not look like a typical regulatory skirmish. On the surface, it was about a few cease-and-desist orders targeting prediction market contracts. In practice, it put a much bigger question on the table. What exactly are prediction markets supposed to be?

Are they casinos in disguise, digital poker rooms with better UX, or a new kind of financial market that belongs under federal oversight?

The answer matters, because the wrong classification could freeze a fast-growing corner of finance in legal limbo.

 

Why Coinbase Is Taking States to Court

The states argue that Coinbase’s prediction markets amount to illegal gambling. Users put money down on outcomes. Some win, some lose. No state gambling license, no approval.

Coinbase sees it very differently. These contracts, the company argues, are event-based derivatives. They look like futures, trade like futures, and are already subject to federal commodities law. The Chief Legal Officer for Coinbase, Paul Grewal, stated in an X post on Friday that the company filed the lawsuits to "confirm what is clear" and that prediction market should fall under the jurisdiction of the U.S. Commodity Futures Trading Commission.

If states are allowed to regulate these markets anyway, the logic goes, national liquidity disappears. A market that works in one state but not another stops being a market at all. But, there are comparisons to existing gambling laws and we broke those down for you.

 

The Casino Comparison Only Goes So Far

State regulators tend to reach for the casino analogy first, and it is easy to see why. There is money at risk. Outcomes are uncertain. The optics are not subtle.

But structurally, prediction markets do not behave like casinos. Casinos set the odds. The house always wins over time. The product is entertainment.

Prediction markets do not work that way. Prices are set by participants. New information moves markets. There is no built-in house edge. The value comes from aggregating beliefs into a number that says something useful about the future.

Calling that gambling because it involves money is a shortcut, and not a very precise one.

 

Poker Explains the Skill Argument, and Its Limits

Poker is the comparison that usually comes next. Courts have spent years debating whether poker is mostly luck or mostly skill. Many have concluded that skill dominates over time, even if chance plays a role in the short run.

Yet poker is still regulated as gambling in most places. Not because it lacks skill, but because the law never quite figured out where else to put it.

That history matters. It shows how activities that clearly reward information and decision-making can still end up trapped in gaming frameworks that were built for something else entirely.

Prediction markets risk repeating that mistake. Like poker, they reward skill. Unlike poker, they are not games. They are continuous markets with prices, liquidity, and arbitrage. Treating them like a card room because money changes hands misses the point.

 

Why Prediction Markets Look Like Futures Markets

If you strip away the cultural baggage, prediction markets start to look familiar. They are standardized contracts tied to future outcomes. Prices reflect probability. Traders respond to data.

That is the same basic logic behind futures contracts tied to interest rates, inflation, or commodities. Those markets involve speculation, risk, and uncertainty too. They are regulated, but they are not treated as gambling.

This is where Coinbase’s argument lands. Congress already created a regulator for markets like this. The CFTC exists to oversee contracts that trade future outcomes, including event-based ones. The fact that an outcome is an election or a policy decision does not change the structure of the market.

 

What Changes If Coinbase Wins

If Coinbase wins, the impact goes well beyond these three states.

First, jurisdiction becomes clearer. States would no longer be able to regulate federally governed prediction markets simply by labeling them gambling. That alone would remove one of the biggest sources of uncertainty hanging over the industry.

Second, the casino argument loses legal weight. Courts would be acknowledging that uncertainty plus money does not automatically equal gambling, especially when prices are discovered through open trading rather than set by an operator.

Third, prediction markets would finally escape the poker problem. They would not sit in a gray zone where skill is recognized but regulation never quite fits. Instead, they would fall under a framework designed for markets, not games.

With that clarity, these markets could scale. Liquidity would deepen. Institutional participants could step in. Contracts tied to economic data, climate outcomes, and corporate milestones could expand without the constant risk of state-level shutdowns.

Over time, prediction markets could start to look less like a regulatory headache and more like infrastructure. Another tool, alongside surveys and models, for figuring out what the world might do next.

 

A Bigger Signal About Regulation

This case is not really about Coinbase. It is about whether U.S. regulation can adapt when finance starts to blur into something new, a question that has stifled digital asset growth for years.

Casinos deal in chance. Poker deals in skill inside a gaming framework. Futures markets deal in information. Prediction markets belong in the third category, even if they make people uncomfortable.

If courts agree, it would send a signal that regulation can still be about function rather than analogy. That is not a radical idea. It is how most financial markets came to exist in the first place. Prediction markets are here to stay. We've seen huge partnerships with major media news outlets and exchanges. The regulatory details need to be clearly defined for this emerging industry.

 

And if that happens, prediction markets may finally stop being debated as gambling, and start being treated as what they have been trying to become all along. Markets that trade in probabilities, under rules built for markets, not casinos.

 

Stay Connected

You can stay up to date on all News, Events, and Marketing of Rare Network, including Rare Evo: America’s Premier Blockchain Conference, happening  July 28th-31st, 2026 at The ARIA Resort & Casino, by following our socials on X, LinkedIn, and YouTube.

Crypto CEOs Join CFTC’s Innovation Council as Market Structure Overhaul Picks Up Speed

Caroline Pham is heading into her final stretch as acting chair of the CFTC, but she is not easing her way out. Instead, she has pulled together a new CEO Innovation Council, bringing in a mix of crypto founders and leaders from major financial institutions. The timing feels intentional. Markets are shifting fast, the technology is shifting even faster, and she clearly wanted this group in place before she hands off the job.

The council itself is an unusual gathering. On one side are Tyler Winklevoss from Gemini, Arjun Sethi from Kraken and Shayne Coplan from Polymarket. On the other, executives from CME Group, Nasdaq, ICE and Cboe. It is not often you see these people sitting on the same advisory panel, let alone one created this quickly. According to the commission, the entire list came together in about two weeks, which says a lot about how much urgency Pham applied.

She thanked the group for agreeing to join so quickly, noting that the commission needs their experience as it tries to prepare for what comes next. The council will focus on the areas where the rulebook is changing as fast as the products themselves. Tokenization. Prediction markets. Perpetual contracts. Crypto collateral. Around the clock trading. Blockchain market plumbing. Basically all the things that traditional derivatives systems were never built to handle.

 

Here is the full list of names:

Shayne Coplan, Polymarket
Craig Donohue, Cboe
Terry Duffy, CME Group
Tom Farley, Bullish
Adena Friedman, Nasdaq
Luke Hoersten, Bitnomial
Tarek Mansour, Kalshi
Kris Marszalek, Crypto.com
David Schwimmer, LSEG
Arjun Sethi, Kraken
Jeff Sprecher, Intercontinental Exchange
Tyler Winklevoss, Gemini

 

All of this is happening as the agency prepares for new leadership. President Trump’s nominee, Mike Selig, is expected to be confirmed soon. When he steps in, he will inherit an agency already deep into crypto policy work that accelerated under Pham. Just this week, the CFTC launched a pilot for using crypto collateral inside derivatives markets. A few days before that, Bitnomial began offering leverage spot crypto trading with her support.

Pham has only been in the acting role for a short time, but she treated crypto as a top priority, pushing several initiatives that line up with the administration’s goal of positioning the United States as a leading hub for digital assets. Over at the SEC, Chairman Paul Atkins has been doing something similar through Project Crypto, which has been absorbing much of the agency’s energy.

 

What comes next will land in Selig’s lap. But with this council now in place, he will walk into a job where the industry and the regulators are already in the middle of a much bigger conversation about what the future of market structure should look like.

Polymarket Secures CFTC Approval, Marking a Landmark Return to the U.S. Regulated Market

Polymarket, one of the most well-known crypto prediction platforms, has officially secured approval from the U.S. Commodity Futures Trading Commission to operate as a fully regulated exchange in the United States. This milestone represents the end of a long regulatory saga and marks the beginning of a new era for event-based markets in the American financial system.

Once viewed primarily as an offshore curiosity on the fringes of crypto, Polymarket is now entering the most regulated derivatives market in the world with a structure that resembles a traditional exchange. The approval signals a wider shift in how prediction markets are treated, not as gray-area gambling products but as legitimate financial instruments with real informational and economic value.

 

A Long Road Back: From Enforcement Actions to Full Approval

Polymarket’s path to reentry took several years and involved significant regulatory challenges.

In 2022 the CFTC fined the company and required it to shut down operations for U.S. customers. At the time the agency viewed Polymarket as an unregistered derivatives venue, and American users were cut off as the platform relocated offshore. For nearly three years Polymarket operated internationally, mostly in regulatory limbo, even as it grew rapidly.

Everything shifted in 2025. Polymarket acquired QCEX, a CFTC-licensed exchange and clearing entity, which gave the company a compliant foundation to reenter the United States. This acquisition changed the regulatory landscape. With QCEX under its umbrella, Polymarket could finally connect to the U.S. derivatives system in a way that aligned with federal rules.

The CFTC then issued a targeted no-action letter providing relief for certain recordkeeping and reporting requirements related specifically to event contracts. This signaled that regulators were open to a structured, compliant form of prediction markets.

The latest approval goes further. It integrates Polymarket’s U.S. entity into the full Designated Contract Market framework, meaning it can now operate in tandem with brokers, clearing firms and professional market infrastructure.

Polymarket has not simply returned. It has transformed.

 

What the New CFTC Approval Allows

With this newly amended approval, Polymarket’s U.S. exchange gains access to traditional financial infrastructure, including:

Intermediated Access

Brokers, futures commission merchants and financial intermediaries can now connect to the exchange. Retail participants will eventually be able to access markets through their existing brokerage accounts.

Regulated Clearing and Custody

Contracts can settle through a compliant clearinghouse with full risk controls, reporting frameworks and established audit systems. This allows Polymarket to operate with the same safeguards that apply to regulated futures markets.

Clear Legal Status

The exchange now sits inside the CFTC’s regulatory perimeter. Instead of operating in a legal gray zone, Polymarket’s U.S. operations function as a recognized derivatives venue.

This level of integration was once unimaginable for prediction markets. Now it represents the new baseline.

---

What Polymarket Plans to Bring to U.S. Users

Polymarket’s core innovation is event-based trading. Users buy or sell positions tied to real-world outcomes such as elections, policy decisions, sports results, economic data releases or cultural events.

The company plans a phased rollout for the U.S. market that will begin with a limited number of markets while onboarding infrastructure is tested. Over time the platform intends to expand into broader categories, including political outcomes, macroeconomic indicators and entertainment markets.

The company has raised substantial capital at valuations nearing one billion dollars, and investors expect the regulated U.S. platform to be a major growth driver.

 

Why This Moment Matters for Prediction Markets

Polymarket’s approval arrives at a time when interest in event contracts is growing across the financial, regulatory and technology sectors. Several major industry trends make this moment especially significant:

A Shift Away From Viewing Markets as Gambling

For decades regulators struggled to categorize prediction markets. The new CFTC framework acknowledges that event-based products can carry informational and hedging value rather than being dismissed as speculative wagers.

Expansion of Prediction Markets Across Industries

Traditional finance platforms, sports betting operators and fintech companies are exploring event-based products. This includes sports markets, political prediction markets and financial data markets.

Integration Into Mainstream Platforms

With intermediated access permitted, it is possible that Polymarket’s markets will eventually appear on traditional brokerage platforms, in the same accounts where users already trade stocks and futures.

Rising Legal Clarity

The regulatory structure around event contracts is still evolving, but Polymarket’s approval provides a template for others to follow. Until recently, no one could point to a clear path. Now there is one.

This is not just a step forward for Polymarket. It is a turning point for the entire prediction market industry.

 

Remaining Risks and Open Questions

While the approval is a major milestone, several challenges remain:

• State-level restrictions may still apply. Some states treat event markets as gambling, regardless of federal classification.

• Political concerns are rising as political event markets attract both attention and controversy.

• Scope of no-action relief remains limited, meaning regulators could still intervene if markets move outside approved parameters.

• Global regulatory landscape remains inconsistent, with foreign jurisdictions applying very different gambling and derivatives rules.

Polymarket’s success in the United States does not automatically eliminate international hurdles.

 

Final Thoughts

Polymarket’s return to the United States in fully regulated form marks one of the most important shifts in the history of prediction markets. A platform once forced offshore has now reentered the U.S. through a regulated, institutional-grade exchange framework. The significance of this moment goes far beyond one company. It signals that prediction markets may finally be entering the financial mainstream.

 

The next phase will determine how widely these markets spread, how they integrate with traditional finance and how regulators balance innovation with oversight. But for now, a once-fringe industry has gained legitimacy, and Polymarket stands at the center of the transformation.

 

Stay Connected

You can stay up to date on all News, Events, and Marketing of Rare Network, including Rare Evo: America’s Premier Blockchain Conference, happening  July 28th-31st, 2026 at The ARIA Resort & Casino, by following our socials on X, LinkedIn, and YouTube.

CFTC Eyes First Leveraged Spot Crypto Products by Next Month

 

The Commodity Futures Trading Commission (CFTC) is reportedly preparing to allow leveraged spot crypto asset products to launch as early as next month. These products would enable retail and institutional traders to buy and sell cryptocurrencies like Bitcoin and Ether on a spot basis with margin or leverage, similar to traditional commodity trading instruments.

This initiative marks a major shift in U.S. crypto regulation. For years, regulators treated spot crypto as largely unregulated or under-enforced. Now, the CFTC is using its existing authority under the Commodity Exchange Act to extend oversight to spot crypto trading, especially trades involving leverage, margin, or financing.

 

What the Proposal Means

Leveraged spot crypto products would work like this: A designated contract market (DCM) or registered futures exchange would list spot crypto contracts that are backed by actual delivery of crypto or tracked via underlying assets. Traders could engage in margin trades on the spot market rather than relying solely on futures or derivatives.

This means platforms regulated under the CFTC could list inventory of crypto assets, allow participants to borrow or finance positions, and require clearing, custody, and risk-management frameworks similar to those in commodities markets.

The CFTC recently launched a “listed spot crypto trading initiative,” inviting comment on how to list these products, including how to handle clearinghouses, custodian arrangements, and whether crypto assets are commodities or securities. That initiative referenced Section 2(c)(2)(D) of the Commodity Exchange Act, which specifically governs retail commodity transactions offered on a leveraged, margined, or financed basis.

The CFTC and the Securities and Exchange Commission (SEC) have also issued a joint staff statement affirming that current law does not prohibit regulated exchanges from listing certain spot crypto asset products, including those with leverage. Together, these regulatory moves signal a clear shift toward opening margin and leverage trading of spot crypto in the U.S.

 

Why It’s Significant for Crypto Markets

1. Regulatory clarity and scale
   For years, one of the key obstacles in the U.S. crypto market was uncertainty over how spot trading with leverage could function under existing law. By establishing a path for leveraged spot crypto trading under CFTC authority, the industry gains a bridge to larger-scale, regulated activity.

2. Margin and leverage could bring more liquidity
   Allowing spot crypto trading with margin may attract more participants, both retail and institutional, because they can use less capital to gain exposure. That could increase market depth and volatility.

3. Domestic competition with offshore exchanges
   Many existing leveraged crypto products are offered by overseas exchanges that lack full U.S. oversight. A regulated domestic pathway could shift volume from offshore platforms to U.S. venues, improving transparency and investor protection.

4. Integration with futures and derivatives markets
   Because these spot leveraged products could be listed on futures exchanges, the ecosystem of trading, hedging, and settlement may become more integrated. This could bring spot, futures, and options markets into closer alignment for crypto assets.

 

The Regulatory Mechanics and Timeline

The key regulatory anchor is Section 2(c)(2)(D) of the Commodity Exchange Act (CEA), which states that retail commodity transactions offered on a leveraged, margined, or financed basis must be conducted on a DCM or foreign board of trade (FBOT). Historically, this applied to futures and certain commodities. The CFTC is now interpreting this to apply to spot crypto if leverage or financing is involved.

On August 4, 2025, the CFTC launched its listed spot crypto trading initiative. Regulators invited public comments on how to implement listing spot crypto asset contracts on designated contract markets. Meanwhile, the CFTC’s acting chair has engaged with regulated exchanges and clearing organizations to prepare the framework.

Separately, the SEC-CFTC joint staff statement issued in early September affirmed that regulated U.S. exchanges may list spot crypto asset products and that margin and leverage are within scope, provided proper registration and oversight exist.

According to multiple reports, the CFTC is in active discussions with major exchanges, including futures venues such as CME, Cboe, and ICE, as well as crypto-native platforms, to list these leveraged spot products possibly by next month. That timeline positions the rollout sooner than many expected, though final approvals and exchange rule submissions remain necessary.

 

Potential Risks and Industry Implications

While this development could scale regulated crypto markets, several risks remain:

• Clearing and custody risk: Spot leveraged contracts require robust clearinghouses and custodians. Any weakness in settlement or collateral arrangements could create systemic stress.

• Market risk: Leverage amplifies both gains and losses. If leveraged retail positions grow without sufficient risk controls, it could increase volatility or trigger sharp liquidations.

• Regulatory arbitrage: As U.S. venues expand these offerings, overseas platforms may still offer different terms. Fragmentation could persist unless the domestic offering is competitive on cost and efficiency.

• Securities law overlap: The CFTC’s effort applies to “commodity” crypto assets. If tokens are deemed securities, the SEC retains oversight. Platforms must ensure proper asset classification and compliance.

 

What to Watch Next

• Exchange rule filings: Watch for futures exchanges or DCMs submitting rule changes or product proposals for leveraged spot crypto contracts.

• Clearinghouse partnerships: Expect new collaborations between clearing organizations and crypto custodians, which are essential for safe margin and settlement operations.

• Public feedback: The CFTC’s open comment process will reveal where industry stakeholders align or disagree on the proposal’s structure.

• Asset inclusion: Bitcoin and Ether are expected to be first, but whether other tokens join early will indicate how broad the regulatory green light truly is.

• Margin parameters: The permitted leverage levels, such as 2x, 5x, or 10x, will determine the potential scale of new trading activity.

 

Final Thoughts

The CFTC’s push to approve leveraged spot crypto products marks a pivotal moment in U.S. digital asset regulation. It moves the market closer to a structure where spot trading of crypto under margin and leverage is not only possible but also regulated in line with traditional commodities.

For the crypto industry, this means deeper liquidity, greater institutional involvement, and a more secure trading environment. Yet it also raises the stakes. Leverage and margin create opportunity but also amplify risk. The success of this initiative will depend on how carefully exchanges, clearinghouses, and regulators manage execution and oversight.

 

If the launch proceeds as early as next month, it could accelerate crypto’s integration into mainstream financial markets and bring a new era of regulated spot trading to the U.S. The next few weeks may determine whether leveraged spot crypto becomes a lasting cornerstone of the industry or remains a tightly controlled experiment.

 

Stay Connected

You can stay up to date on all News, Events, and Marketing of Rare Network, including Rare Evo: America’s Premier Blockchain Conference, happening  July 28th-31st, 2026 at The ARIA Resort & Casino, by following our socials on X, LinkedIn, and YouTube.