Crypto Regulation Heats Up as Congress and Agencies Advance Key Policies

As summer approaches, the U.S. cryptocurrency regulatory landscape is becoming increasingly active. From digital asset tax legislation in Congress to new prediction market regulations proposed by the Commodity Futures Trading Commission (CFTC), policymakers and regulators are intensifying their focus on the crypto industry.

A recent hearing held by the House Ways and Means Committee highlighted ongoing efforts to develop comprehensive cryptocurrency tax rules. Unlike many recent crypto-related hearings, the discussion remained largely bipartisan and focused on substance rather than politics. Lawmakers questioned industry experts about potential gaps in current tax policy, the treatment of digital assets, and how future crypto tax regulations could be implemented effectively.

While no major policy decisions emerged from the hearing, the session demonstrated that significant work remains before any crypto tax bill can advance through committee markups and reach a House floor vote. Some lawmakers also raised concerns about whether cryptocurrency taxation should be prioritized given broader economic challenges.

Meanwhile, the CFTC has released a proposal outlining how it plans to regulate prediction markets. The proposal seeks public feedback and addresses key issues, including how the agency defines gaming activities and which prediction market contracts qualify as federally regulated swap products.

The debate surrounding prediction markets continues to intensify. Former Securities and Exchange Commission (SEC) and CFTC Chair Gary Gensler joined several organizations and state governments in filing an amicus brief arguing that the legal definition of swaps was never intended to cover products resembling sports betting. Despite these arguments, the CFTC recently filed a lawsuit against New Mexico, maintaining that sports-related prediction market contracts fall under federal oversight rather than state gaming regulations.

On the SEC front, market participants are closely monitoring the agency’s anticipated innovation exemption proposal. The release has reportedly been delayed, and legal experts have already expressed concerns regarding its structure and potential impact on digital asset innovation.

In another significant development, former FTX CEO Sam Bankman-Fried suffered a legal setback when a federal appeals court rejected his appeal of his 2023 fraud and conspiracy conviction. The Second Circuit Court of Appeals upheld the trial court's handling of the case, leaving the conviction intact.

With no major congressional hearings or regulatory events currently scheduled this week, attention remains focused on how crypto tax legislation, prediction market regulation, and broader digital asset policies will evolve in the coming months.