On April 29, the Senate unanimously agreed on a resolution banning Senators and their staff from using prediction markets, effective immediately. Senators leading the effort also call for bans on House officials, members of the executive branch, and high-ranking government officials trading on prediction markets. Prominent prediction markets praised the measure and noted that the resolution reflects their terms and conditions.
Hours after the resolution passed, Senators Kristen Gillibrand (D-NY) and Dave McCormick (R-PA) introduced a bill to prevent government officials from trading on prediction markets, establish standards on insider trading, introduce additional anti-money laundering safeguards, protect consumer funds, and preserve state authority to enforce consumer protections. The bill would also create an independent Office of the Retail Advocate within the CFTC to assist consumers and target bad actors.
This week, regulated exchange & prediction market Kalshi announced new features to prevent kids from accessing prediction markets, specifically targeting loopholes used by underage kids to access the platform. Kalshi will make face ID the default for those with it already enabled and promote two-factor authentication for parents to prevent access by their children. The platform will also allow users to check if someone is logged in with their ID and request selfies to confirm identification. In a comment on May 4, Kalshi stated that it is “proactively implementing measures outlined” in the bill introduced by Senators Gillibrand and McCormick last week.
On April 30, the Senate Commerce, Science, & Transportation Committee announced a hearing on
May 20 on sports betting, which will include a discussion of prediction markets. Former Representative Patrick McHenry will testify as a Senior Advisor for the Coalition for Prediction Markets alongside representatives from gambling associations.
In response to an opinion column on April 27, CFTC Chairman Michael Selig penned a letter to the editor of The Wall Street Journal to defend the CFTC’s exclusive jurisdiction over prediction markets, positioning prediction markets as an “innovative financial product” instead of online gambling. While the opinion column finds prediction markets are overrun with insider trading due to lax regulation by the CFTC, Selig states that the opinion column “distorts reality” and that the CFTC has “strengthened and modernized … strategies” against bad actors in prediction markets.
Over the weekend, Senators Angela Alsobrooks (D-Md.) and Thom Tillis (R-N.C.) announced a compromise between the banking and crypto industries on stablecoin yield. Specifically, rewards on stablecoin accounts would be prohibited if the rewards are “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” The new agreement would also direct regulators to adopt new regulations on stablecoins, including on disclosures and permissible rewards. While the compromise represents a significant step towards the passage of the Digital Asset Market Clarity (CLARITY) Act, banking groups remain concerned about rewards on stablecoins. On May 4, bank trade groups released a joint statement pointing out “evasion that could be permitted under Section 404 as drafted” and announced their intention to provide suggestions for stablecoin yield language in the next few days.