Post by Augustine Chiagozie (@pabloexchange)

😳 Another major regulatory update has just landed out of the US.

During a House subcommittee hearing, legal experts noted that the upcoming CLARITY Act—the landmark bill Trump promised would finally bring overarching regulation to crypto—could grant the CFTC massive authority to crack down on prediction markets like Polymarket and Kalshi.

Here is a quick breakdown of what's going on:

- Right now, the CFTC, under its new chair, is trying to unilaterally assert control over the sector, arguing that event contracts qualify as "swaps" under its jurisdiction. This has triggered a fierce conflict with state regulators trying to treat these platforms as standard sports betting, and the Commission is simply too short-staffed to handle the onslaught of legal battles.
- The CLARITY Act is expected to hand the CFTC additional regulatory teeth for crypto, alongside the necessary resources and legal backing to clean up the "explosive growth" of prediction markets. The text of the bill is anticipated to drop very soon.
- US gambling industry groups are already lobbying to insert language into the bill that would explicitly ban event contracts tied to sports and casino-style gaming.

The US is moving aggressively to tighten the screws, building a rigid vertical of control over everything touching Web3 liquidity—from stablecoins (via the GENIUS Act) to prediction platforms. It remains to be seen how this will impact volumes on giants like Polymarket, but the regulatory noose is tightening fast.

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