U.S. crypto policy debate broadens as tax bills and prediction market rules advance

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US crypto policy debate widens

Highlights

The House Ways and Means Committee reviewed digital asset tax bill drafts, with lawmakers debating the urgency and scope of crypto taxation gaps.
The CFTC proposed a rule and seeks public comment to clarify which prediction market contracts are regulated swaps, as it simultaneously sues New Mexico over sports-betting classification.
Sam Bankman-Fried's appeal on his 2023 fraud and conspiracy conviction was denied by the Second Circuit, maintaining his conviction under Judge Lewis Kaplan.

Tax and prediction market agenda gains momentum

As reported by CoinDesk, the House Ways and Means Committee last week held a hearing on digital asset tax bills, while the Commodity Futures Trading Commission released a proposal on regulating prediction markets.

The committee hearing focuses on discussion drafts tied to crypto taxation, with lawmakers asking largely substantive questions about how tax rules might work and where current policy gaps remain. The discussion appears more conciliatory than some earlier crypto hearings, though some lawmakers question whether the issue is urgent under current economic conditions.

For the CFTC, the proposal marks an early step toward a more formal framework for prediction markets. The regulator is seeking public comment as it examines how to define gaming and determine which contracts fall within federally regulated swap products and which do not.

Court fights and regulatory spillover shape industry outlook

Legal pressure around prediction markets is also intensifying. Former SEC and CFTC Chair Gary Gensler files an amicus brief with other entities and states arguing that the term swaps was never intended to cover products that resemble sports betting, while the CFTC separately sues New Mexico on Friday, maintaining that sports-related prediction markets are still swaps and should not be overseen by a state gaming regulator.

On the SEC side, market participants are waiting for the agency’s innovation exemption proposal, whose public release has already been delayed. Legal experts cited in the newsletter raise concerns about how the proposal appears to be structured so far.

The broader enforcement backdrop also remains active. Sam Bankman-Fried loses his appeal of his 2023 fraud and conspiracy conviction after a Second Circuit Court of Appeals panel finds that District Judge Lewis Kaplan did not overstep or mishandle the criminal trial.

Our earlier coverage of Treasury Secretary Scott Bessent’s Houston remarks outlined how the administration is tying its tax, trade and deregulation agenda to a push for “energy dominance.” We noted his argument that expanded domestic oil and gas output, faster permitting and lower regulatory costs are intended to support job growth, investment and U.S. economic security, with Texas held up as a model for this approach.

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