Launchy Regulatory Roundup #75 - SEC Flags Prediction Markets as Regulatory Flashpoint

📢 Sponsor | 💡 Telegram | 📰 Past Editions

Good Morning.

Welcome to our 75th edition of the regulatory roundup. If you know anybody who would benefit from this content, please help us spread the word!

In Today's Edition:

• Headline: SEC Flags Prediction Markets as Regulatory Flashpoint 👀 

• Global Legal Roundup

• Case Study: Banks and Crypto May Converge 🔎 

You read and share. We listen and improve. Send us feedback at [email protected].

HEADLINE

SEC Flags Prediction Markets as Regulatory Flashpoint

State of play: SEC Chair Paul Atkins called prediction markets a “huge issue” during a Senate Banking Committee hearing, signaling rising regulatory focus as platforms like Kalshi and Polymarket expand rapidly.

• Atkins said the space involves potential overlapping jurisdiction between the SEC and the CFTC.

• While prediction markets largely fall under the CFTC, certain contract structures could trigger securities laws depending on wording and design.

The regulatory tension centers on whether event contracts are federally regulated derivatives under the Commodity Exchange Act or whether states can pursue gambling law violations.

• Some states have already launched legal challenges, particularly around sports related markets.

• Atkins emphasized that the SEC and CFTC are now coordinating closely, meeting weekly under “Project Crypto.”

• CFTC Chair Michael Selig echoed the need for clear rules that prevent markets from moving offshore while maintaining investor protections.

What’s Next: Leadership gaps at both agencies could further shape how aggressively the sector is regulated going forward.

Why it Matters: Prediction markets are becoming a jurisdiction test between the SEC and CFTC. How they are classified will shape future rules for hybrid crypto financial products.

Our Take: If the CFTC keeps primary oversight, growth continues with clearer rails. If the SEC expands its reach, expect tighter compliance and slower momentum.

GLOBAL LEGAL ROUNDUP

America:

• 🇺🇲 Democrats press SEC's Atkins over dropped crypto cases.

• 🇺🇲 Banks demand restrictive parameters on stablecoin rewards.

• 🇺🇲 Crypto super PAC launches $1.5M effort to unseat Al Green.

• 🇺🇲 Banking lobby urges OCC to address risks around crypto firm.

• 🇺🇲 CFTC Chair appoints crypto heavyweights to innovation advisory panel.

• 🇺🇲 Sens. Warren, Kim demand CFIUS review of UAE's $500M stake in WLFI.

Europe:

• 🇬🇧 UK FCA seeks to block HTX after alleged breaches of marketing rules.

• 🇳🇱 Dutch House of Representatives advances controversial 36% tax law.

• 🇪🇺 EU considering a ban on crypto tx with Russia to tighten sanctions evasion.

APAC:

• 🇻🇳 Vietnam to tax crypto like stocks with 0.1% trading levy.

• 🇹🇭 Thailand moves to integrate crypto into local derivatives market.

• 🇲🇾 Malaysia's CB to launch 3 stablecoin & tokenized deposit initiatives.

• 🇭🇰 HK expands crypto rules to allow margin financing and perp contracts.

• 🇰🇷 South Korea to tighten crypto oversight targeting market manipulation.

• 🇰🇷 South Korea launches probe into Bithumb over $43B fat-finger incident.

• 🇨🇳 China tightens stance on RWA tokenization and offshore yuan stablecoins.

CASE STUDY

Banks and Crypto May Converge

State of play: US Treasury Secretary Scott Bessent told the Senate Banking Committee that traditional banks and crypto firms could eventually offer similar financial products.

• He said the Treasury is already working with small and community banks to integrate them into the digital asset ecosystem.

• Bessent stressed that clear regulation is essential and urged support for the CLARITY Act, warning that firms resisting US oversight could relocate abroad.

• He framed regulation as a balance between innovation and financial safety.

• A key sticking point in the stalled crypto market structure bill is concern over stablecoin yields and potential deposit flight from banks.

• Bessent said deposit volatility is “very undesirable” and pledged to prevent disruptions that could weaken community bank lending.

Our Take: Washington is positioning crypto as future banking infrastructure, not an outsider system. The core issue is deposit stability versus yield competition.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our comprehensive database of crypto regulations around the world👇

NOTEWORTHY READS & MEME

• Patrick Scott’s read on The Mog Economy.

• Daniel Barabander’s read on The 7 Powers in Crypto.

• Coindesk’s read on the US regulator declares do-over on prediction markets.

If you enjoy reading this issue, please consider subscribing. It takes 1 minute of your time but it would mean the world to us 🙇

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.