The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have submitted their respective regulatory proposals regarding crypto assets and prediction markets to the White House Office of Information and Regulatory Affairs (OIRA), marking the formal start of institutional exploration of this emerging field at the federal level. Although submission does not equate to rule implementation, this move indicates that the two agencies have shifted from verbal warnings to written norms, reflecting a significant change in regulatory attitude.
For the past few years, the Biden administration has primarily relied on law enforcement to address the crypto industry, using lawsuits and fines to address gray areas, and using uncertainty as a tool for suppression. Now, the regulatory focus is shifting towards building a clear legal framework to replace the previous “post-event accountability” model.
SEC Chairman Paul Atkins' proposed token classification framework directly addresses a long-standing pain point in the industry: the lack of clear standards for determining whether a digital asset is a security or a commodity. This definition directly affects regulatory jurisdiction—the SEC governs securities, and the CFTC governs commodities. Previously, companies and investors operated in a legal vacuum, facing the risk of enforcement at any time. The new framework attempts to establish quantifiable criteria so that market participants can clearly understand their compliance obligations before acting, rather than being forced to respond after receiving a subpoena.
Prediction markets especially benefit from unified federal regulation. Currently, the legality of these platforms varies from state to state, with some states issuing bans on the grounds of gambling, while the CFTC considers them legitimate derivatives trading. If federal rules can be established, they will unify compliance standards while introducing obligations such as transaction monitoring, customer protection, and continuous disclosure, far exceeding the requirements of traditional gambling platforms.
However, the Supreme Court's 2024 ruling in Loper Bright Enterprises v. Raimondo limited the power of federal agencies to interpret ambiguous laws on their own, meaning that rules issued solely on the basis of administrative guidance may face judicial challenges. Atkins admitted that true certainty can only come from congressional legislation. Administrative guidance can provide temporary relief, but it cannot withstand policy reversals or legal revocations.
The conflict between federal and state powers further complicates matters. States such as New York still regard sports event prediction contracts as illegal gambling and continue to crack down on related platforms; while federal agencies hope to incorporate them into the financial regulatory system. Both parties claim jurisdiction over the same transaction, and no coordination mechanism has been reached to date, creating a dual dilemma of regulatory overlap and policy fragmentation. In the future, only legislative coordination can resolve this structural contradiction.