Cointelegraph

Canada’s federal government has proposed a total ban on cryptocurrency donations to political parties, citing concerns that foreign entities could exploit the technology to interfere in elections.

Known as the Strong and Free Elections Act, the bill was introduced on Thursday and proposed to amend the Canada Elections Act to prohibit political parties and third parties involved in the election process from accepting donations in crypto, money orders and prepaid cards to prevent anonymous and “hard to trace contributions.”

The bill's sponsor, Steven MacKinnon, the leader of the government in the House of Commons, said in an X statement on Thursday that the measures are intended to block foreign interference and other threats to elections.

“With the introduction of the Strong and Free Elections Act, new investments to counter foreign threats and stronger government coordination, we are acting to ensure our elections remain free, fair and secure at all times,” he said.

Source: Steven MacKinnon 

Canada is not alone in its concerns. The UK government also announced plans for a moratorium on crypto donations on Thursday, following an independent review and pressure from senior politicians.

First attempt at banning crypto donations failed

The current Strong and Free Elections Act had its first reading in the House of Commons on Thursday. To become law, it must progress through several readings and a committee stage in that chamber, then pass through the Senate before reaching the Governor General of Canada for royal assent.

A similar bill was proposed in 2024 by Dominic LeBlanc, then minister of public safety, but it failed to advance past second reading in the House of Commons and ultimately died.

Crypto political donations in Canada have been permitted since 2019 and are treated as non-monetary contributions, similar to property donations. 

However, a 2024 report by Stéphane Perrault, the chief electoral officer, recommended a ban on crypto in politics altogether on the grounds that it “poses challenges in identifying a contributor.”

Penalties could be up to twice the amount contributed

If the proposed legislation becomes law, contributions made using any of the banned payment methods must be returned, destroyed or delivered to the chief electoral officer. 

Penalties for violations could include up to twice the amount contributed, plus $25,000 for individuals and $100,000 for corporate entities.

The bill also proposes expanding existing bans on realistic deepfakes that impersonate electoral candidates to mislead voters. The issue gained attention in the lead-up to the 2024 US elections, with one reported case involving a deepfake of then-President Biden urging voters not to participate.

Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026

Kalshi is facing another state-level lawsuit after the state of Washington on Friday filed allegations that the prediction market operator violated state gambling laws with its products.

The Washington Attorney General’s complaint cites the Pacific Northwest state’s existing ban on online gambling and otherwise strict oversight of the gaming market, in claiming Kalshi violated the Washington Consumer Protection Act, Gambling Act, and Recovery of Money Lost at Gambling Act.

"Kalshi’s website and app show consumers a range of events that they can bet on and the odds for those various events, which dictate how much the bettor will be paid out if the event occurs," an announcement from Attorney General Nick Brown said. "This is exactly how sportsbooks and other gambling operations function. Kalshi advertises that they allow consumers to 'bet on anything' by simply calling their service a 'prediction market' rather than 'gambling.'"

The definition of gambling under Washington law is “staking or risking something of value upon the outcome of a contest of chance or a future contingent event,” and Kalshi’s activities fall squarely within that definition, the AG’s announcement said. “Each Kalshi bet risks money, relies in part on chance, and promises a payout to winners.”

Kalshi immediately sought to move the case to federal court, saying in its filing that the issues raised by the Washington suit are already being  litigated in other federal courts and that there had been "no warning or dialogue" from Washington state  prior to the lawsuit.

Cover page of State of Washington v. KalshiEx, Source: King County Superior Court

State AGs and gaming regulators mount legal fights across the country

A Nevada judge earlier this month temporarily blocked Kalshi from operating in the state, finding that state authorities are reasonably likely to prevail in a legal fight over whether the company’s event contracts violate Nevada gambling laws.

Carson City District Court Judge Jason Woodbury issued a temporary restraining order on Friday, siding with a Nevada Gaming Control Board motion to block Kalshi from operating in the state for 14 days.

Kalshi had argued that its contracts are under the exclusive jurisdiction of the US Commodity Futures Trading Commission, an agency that has backed prediction markets that are fighting in multiple state courts over accusations of offering illegal gambling.

Days earlier, Arizona Attorney General Kris Mayes announced charges against the companies behind Kalshi, alleging that the company operated an “illegal gambling business in Arizona without a license” and offered illegal election wagering.

While Kalshi faces several similar cases filed by gaming authorities in other US states over the platform allegedly offering sports gambling to residents without a license, Arizona was one of the first to file criminal charges.

The state-level cases come as prediction markets are under scrutiny by lawmakers for offering bets on US military actions, citing concerns about insider information in the government.

Magazine: Nobody knows if quantum secure cryptography will even work

Tokenized equities framework xStocks has teamed with alternative investment platform Fundrise to bring onchain the newly public Fundrise Innovation Fund, expanding late-stage private market companies exposure.

The single tokenized asset VCXx is expected to go live on the xStocks platform in the coming days, according to a Friday announcement.

The move to bring Fundrise onchain comes just days after the closed-end fund began trading on the New York Stock Exchange with its portfolio that includes private shares of tech companies including Anthropic, Databricks and SpaceX. Early days trading saw the stock surge from its March 19 $31 debut price to as high as $575 per share.

However, a critical report by short seller Citron Research on Thursday which said Fundrise Advisors LLC faced SEC charges in 2023 over paid solicitation activities. Citron called on regulators to examine whether the firm is currently compensating influencers to promote VCX. The shares ended the week at $173, down almost 34% on Friday, before shedding another 5.9% in after-hours activity.

Fundrise Innovation Fund co-founder and CEO Ben Miller told CNBC on Friday that critics were mounting an unfounded smear campaign and defended the fund’s strategy and its effort to expand access to private tech companies.

Source: CNBC

Tokenized stocks top $1B in total value onchain

Tokenized stocks pushed past $1 billion in total value onchain earlier this month as investor interest grows in the fast-growing real-world asset (RWA) sector.

Data from RWA.xyz shows the value of tokenized equities climbing past the $1 billion mark, as platforms offering blockchain-based exposure to traditional stocks attract more investor trading and liquidity.

To be sure, much of that activity is concentrated among a small number of operators. RWA.xyz data shows that Ondo holds about 58% of the market, while tokenized stock products issued under the xStocks platform account for roughly 24%, forming an early duopoly in the sector.

Foresight Ventures in a March 10 report posited that the market is consolidating around these early leaders, citing regulatory barriers, liquidity advantages and differing tokenization models as key factors shaping competition in the sector.

Tokenized stocks crossed the $1 billion milestone. Source: RWA.xyz

Magazine: China’s ‘50x’ blockchain boost, Alibaba-linked AI mines Bitcoin: Asia Express

Google is preparing to support a multibillion-dollar data center project in Texas leased to Anthropic as competition for AI infrastructure accelerates.

The project, operated by Nexus Data Centers, could exceed $5 billion in its initial phase, with Google expected to provide construction loans, Financial Times reported on Friday, citing people familiar with the matter. A consortium of banks is also competing to arrange financing by mid-year, per the report.

According to the report, Anthropic recently signed a lease for the 2,800-acre campus, which forms part of its broader infrastructure tie-up with Google. Construction is already underway, supported by early-stage debt financing from Eagle Point, a publicly traded closed-end investment company.

The site is expected to deliver around 500 megawatts of capacity by late 2026, roughly equivalent to powering 500,000 homes, with potential expansion to 7.7 gigawatts. Its location is near major gas pipelines operated by companies including Enterprise Products Partners, Energy Transfer and Atmos Energy, allowing the project to rely on on-site gas turbines.

Judge blocks Pentagon ban on Anthropic

On Thursday, a US federal judge in San Francisco temporarily blocked the Pentagon from labeling Anthropic a national security risk and halting government use of its AI tools. Judge Rita Lin granted a preliminary injunction, pausing a directive backed by President Donald Trump that sought to cut off federal use of Anthropic’s chatbot, Claude.

The ruling came in a lawsuit filed by Anthropic, which argued that Defense Secretary Pete Hegseth overstepped his authority by designating the company a supply chain risk. The judge described the government’s actions as “arbitrary” and warned against branding a US company as a threat without clear legal basis.

The dispute followed a breakdown in negotiations between Anthropic and the Pentagon over the military use of its AI. The company resisted allowing its models to be used for lethal autonomous weapons or mass surveillance, leading to a broader standoff with the administration.

Source: Defense Secretary Pete Hegseth

In her decision, Lin said the government may have retaliated against Anthropic for its public stance, calling the measures a likely violation of First Amendment protections.

US military used Anthropic AI in Iran strike

As Cointelegraph reported, US military units reportedly used Anthropic’s Claude AI model during a major airstrike on Iran, even after the ban order by Trump. Military commands, including US Central Command (CENTCOM) in the Middle East, reportedly used the AI model for operational support

Magazine: Bitcoin may take 7 years to upgrade to post-quantum — BIP-360 co-author

Prediction markets aggregate human judgment in theory, but some of their consistent trading opportunities may end up captured by systems that move faster than any person can.

Arbitrage opportunities can show up as brief mispricings, from outcomes that temporarily fail to sum up to 100%, to short delays in how quickly markets react to new information.

Rodrigo Coelho, CEO of Edge & Node, said bots are already scanning hundreds of markets per second, a role that increasingly overlaps with more advanced AI-driven agents.

“Capturing those opportunities requires monitoring thousands of markets and executing trades almost instantly, which is why they’re largely dominated by automated systems,” Coelho told Cointelegraph.

That makes prediction markets a natural next step for AI-driven systems built to exploit short-lived pricing gaps without human input.

AI agents can target brief gaps in prediction markets. Source: Rohan Paul

Arbitrage mechanics in prediction markets

Bitcoin and crypto prices haven’t been performing well recently, with BitMine’s Tom Lee calling the current sentiment a “mini-crypto winter.” Meanwhile, prediction markets have emerged as venues where users can bet to profit independently of broader economic conditions.

The rise of prediction markets has also seen opportunities such as what Coelho calls “latency arbitrage,” which rely on short windows too narrow for humans to manually target. He told Cointelegraph:

If there’s even a few-second delay between an event happening and the market updating, bots scan for that and place bets on the correct outcome. For that window, they have a 100% guaranteed win.”

A recent study found that Polymarket exhibits frequent pricing inconsistencies, allowing traders to construct arbitrage positions. These opportunities arise both within individual markets, where probabilities don’t sum to 100%, and across related markets with inconsistent pricing. The researchers estimated that roughly $40 million has been extracted from these inefficiencies.

Academic researchers present their findings at the International Conference on Advances in Financial Technologies. Source: CyLab/YouTube

Prediction markets are still nascent, but their technology has been improving as well. For example, Polymarket recently introduced taker fees to increase trading costs. Outcomes aren’t finalized immediately, making these strategies less reliable and not always profitable.

AI agents could amplify market manipulation risks

Aside from arbitrage, AI agents could increasingly take over activity in prediction markets, raising concerns that automated systems may replicate the same behaviors seen from humans. They are trained on human activity, after all. 

Coelho pointed out that large players can influence outcomes by placing sizable bets on one side, and that more advanced agents could exploit similar dynamics at scale.

“If you have a large pool of money and the market is thin, you can bet on one side and sway the market, like we saw in the election when some French guy put in like [$45 million] on Donald Trump winning,” he said.

Polymarket’s open interest was highest around October and early November of 2024, during the US elections, according to Dune Analytics data. Following a sharp initial decline, it has continued to surge in popularity, with politics leading as the most popular topic, followed by sports and crypto.

Polymarket’s open interest is nearing 2024 election levels. Source: datadashboards/Dune Analytics

Pranav Maheshwari, engineer at Edge & Node, said the rapid improvement of AI agents alongside prediction markets makes such risks more urgent and called for guardrails.

“Up until now, AI agents have medium capability and we give them a lot of permissions. With this medium capability, they have already started acting autonomously,” Maheshwari told Cointelegraph.

But in the future, AI agents will have really high capabilities. When it has really high capabilities as humans, you have to restrict their permissions.”

From execution bots to AI-driven systems

Trading itself is undergoing a shift, as automation moves from simple execution bots to more advanced, AI-assisted systems capable of identifying and acting on opportunities in real time.

The systems currently used to exploit market inefficiencies remain largely rule-based, but the tools behind them are evolving.

Archie Chaudhury, CEO of LayerLens, said most retail participants are not using AI agents directly, relying instead on chatbot interfaces like ChatGPT or Gemini for research, while more advanced users are beginning to experiment with automation.

“Some of us simply use coding agents such as Claude Code to create automated bots or algorithms for executing trades, while others take it a step further, using autonomous tools such as OpenClaw to enable the automatic execution of trades and other policies,” he told Cointelegraph.

As AI literacy among retail traders rises, agents could broaden access to strategies that were previously limited to institutions, according to Chaudhury. However, this does not eliminate competition, and large institutions are already using AI, though not always publicly.

He added that existing large language model architectures are well suited to interpreting structured financial data, which could lower the technical barrier for building trading systems that would have previously required specialized quantitative expertise.

The same dynamics are already visible across crypto markets, where arbitrage increasingly depends on automation rather than human judgment. As these systems evolve, the edge is shifting execution speed. Those leaning on AI and automation have a clear edge over those that don’t.

Magazine: Agent wastes 14 hours of scammers’ time, LLMs ‘poisoned’ by Iran: AI Eye

Senator Elizabeth Warren has reportedly asked the US Commerce Department to explain how it is handling potential national security risks tied to Chinese crypto mining giant Bitmain, following previous reports that the firm has been under federal scrutiny.

In a letter sent Thursday to Commerce Secretary Howard Lutnick, Warren requested documents and communications related to Bitmain, which manufactures a large share of the world’s Bitcoin mining equipment, Bloomberg reported on Friday.

In November last year, it was reported that US authorities had launched an investigation into Bitmain over potential national security risks. The probe, known as “Operation Red Sunset” and led by the US Department of Homeland Security, aimed to examine whether Bitmain’s ASIC machines could be remotely accessed for espionage or used to disrupt the US power grid.

According to Bloomberg, the probe remains unresolved, and its current status is unclear. National security investigations of this type can run for years without public disclosure or legal action.

US scrutiny of Bitmain deepens

The scrutiny follows earlier actions, including halted shipments of Bitmain devices and a separate investigation into a related Chinese chip firm over alleged links to sanctioned Huawei.

In 2024, a federal review also flagged the use of its machines near a US military base as raising “significant national security concerns.”

Mining hardware market share is divided between three large manufacturers. Source: University of Cambridge

In July last year, Bloomberg also reported that Bitmain is preparing to open its first US-based ASIC manufacturing facility, with chip production expected to begin in early 2026 and scale by year-end.

Cointelegraph reached out to Warren and Bitmain for comment, but had not received a response by publication.

Trump-backed American Bitcoin buys Bitmain mining rigs

Bitmain’s machines are widely used in Bitcoin mining operations, including by American Bitcoin Corp., which counts Eric Trump and Donald Trump Jr. among its investors. The firm agreed last year to acquire 16,000 Bitmain rigs in a $314 million deal.

Warren’s letter also seeks details on any communications between Bitmain, the Trump family and Commerce officials, and asks what steps the department has taken to shield national security decisions from political influence.

Magazine: Bitcoin may take 7 years to upgrade to post-quantum — BIP-360 co-author

Bitcoin (BTC) has shed all its March gains, currently down 1.40% on the monthly chart and 24.6% for the first quarter of 2026. Bitcoin’s longer-term performance aligns with a deep drawdown cycle for BTC, which may extend until the end of 2026 and many analysts expect another 40% drop in price.

This scenario pushes Bitcoin’s recovery into Q2 2027, as a deeper BTC price drop tends to take longer to recover from.

Bitcoin drawdown depth extends the recovery timeline

Ecoinometrics data shows a clear link between the drawdown depth and recovery duration. Each additional 10% decline has historically added about 80 days to the time required to reclaim the prior highs.

At the current 48% drawdown, the full recovery cycle is estimated to be near 300 days from the October peak of $126,000 in 2025. 

Bitcoin drawdown analysis based on correction depth. Source: Ecoinometrics

Currently, roughly 172 days have passed, leaving about 125 to 130 days if the cycle low is already confirmed at $60,000. However, the cycle lows might not have been tagged yet, with BTC potentially looking at further downside in the coming weeks. 

The Bitcoin Combined Market Index (BCMI), which combines market-value to realized-value (MVRV), net unrealized profit/loss (NUPL), spent output profit ratio (SOPR) and market sentiment, currently sits near 0.27.

This level is notably above the 0.15 threshold that has marked the cycle bottoms in every major downturn since 2018.

Bitcoin Combined Market Index. Source: CryptoQuant

In the 2018 cycle, BCMI reached 0.15 as Bitcoin fell to $3,100 from its $20,000 peak. In 2020, the index dropped to 0.147 when the price was $5,100. Similarly, in November 2022, BCMI fell to 0.12 as BTC formed its cycle lows at $15,880.

With the index still elevated relative to these historical bottom zones, a move toward 0.15 in 2026 likely requires further downside in BTC’s price. Such a scenario aligns with a deeper capitulation phase for BTC, consistent with the prior cycle resets.

Related: Bitcoin dips under $66K as oil sparks 'unsustainable' US inflation risk

Deeper BTC lows extend the recovery window to Q2 2027

Crypto trader Ardi noted that the whale delta vs retail delta reached its most aggressive sell level at -22.13 since October 2024. The chart illustrates the BTC price breaking below a rising trendline, while underlying flows show consistent distribution from the larger participants. Ardi said,

“Larger players are selling into this structure harder than they have in 18 months. That does not mean price has to collapse immediately. But it does mean this level is being tested with real sell pressure pressing into it.”

Bitcoin price, whale vs retail delta. Source: X

From a liquidity standpoint, CMCC Crest managing partner Willy Woo outlined a similar weakness for BTC’s price. Woo accurately mapped out last month that BTC would rebound to the mid-$70,000 region in March, before aligning with the bearish trend as “the broader regime is heavily bearish with both spot and futures liquidity deteriorating.”

From a cycle perspective, Woo expects a deeper reset before a confirmed bottom forms. Woo identified the $40,000–$45,000 range as a typical bear market floor, with timing skewed toward Q4 for the end of the bearish phase.

The framework places the return of a stronger bullish momentum into early 2027.

Bitcoin flow model by Willy Woo. Source: X

If Bitcoin extends its decline toward the $40,000–$45,000 range, the drawdown from the $126,000 peak deepens to roughly 64–68% from all-time highs. Based on Ecoinometrics’ model, the additional downside significantly stretches the recovery timeline.

At a 60%+ drawdown, the total recovery period historically expands to around 440 days from the cycle peak. In this scenario, a potential reclaim of the prior all-time high is expected to fall sometime after Q2 2027.

It is important to note that these timelines are based on historical drawdown patterns and do not represent predictions. The current macroeconomic conditions may alter that recovery path as well.

The Kobeissi Letter noted that the rate cuts are now expected only by December 2027, with a 51% chance of a rate hike by March 2027. This unexpected development may impact Bitcoin’s recovery pace relative to past cycles.

Related: Bitcoin gained 655% the last time this supply in profit metric dropped to 50%

Spot Bitcoin exchange-traded funds (ETFs) snapped a four-week inflow streak, posting $296.18 million in net outflows for the week ending Friday.

The reversal follows a sustained run of inflows totaling more than $2.2 billion across four consecutive weeks, including $787.31 million, $568.45 million and $767.33 million in early March, before slowing to $95.18 million in the prior week, according to SoSoValue data.

The weekly outflow followed back-to-back daily withdrawals on Thursday and Friday totaling more than $396 million, including a $225.48 million outflow on Friday alone, their biggest day of redemptions since March 3, when they posted $348 million in outflows.

Spot Bitcoin ETFs see weekly outflows. Source: SoSoValue

Notably, cumulative net inflows into spot Bitcoin (BTC) ETFs stand at $55.93 billion, while total net assets have slipped to $84.77 billion from over $90 billion a week earlier. Trading activity also moderated, with weekly volume falling to $14.26 billion from $25.87 billion earlier in March.

Macro calm masks deeper risks

In a statement shared with Cointelegraph, a Bitunix analyst said the current macro backdrop is defined by “surface stability, internal imbalance,” as geopolitical risks remain unresolved while policymakers attempt to maintain outward calm. Developments such as the US–EU trade agreement and delayed tensions in the Middle East have temporarily eased market stress, but underlying risks remain.

In this environment, Bitcoin is behaving less like a breakout asset and more like a reflection of liquidity conditions, the analyst said. The asset remains range-bound between $65,000 and $72,000, with signs of demand absorption but limited follow-through on upside attempts.

“Capital is not exiting the market, but neither is it willing to take directional risk,” the analyst said, adding that price action is likely to remain volatile within established ranges until macro conditions align for a clearer trend.

Ethereum ETFs extend outflow streak

Meanwhile, spot Ether (ETH) ETFs recorded $206.58 million in weekly outflows, marking a second consecutive week of losses and reversing the modest inflow streak seen earlier in March.

Daily data shows consistent outflows throughout the week. Funds saw withdrawals every trading day since March 18. The largest single-day outflow came on Thursday at $92.54 million, followed by $48.54 million on Friday.

Magazine: Bitcoin’s ‘biggest bull catalyst’ would be Saylor’s liquidation — Santiment founder

The Sharpe Ratio for XRP (XRP), a measure of return per unit of risk, turned slightly positive on March 26, after spending months near or below zero between October 2024 and February 2025.

A 30-day average return of 0.00063 supports this positive shift, while the Sharpe ratio stands at 0.0267, which reflects that the “current returns still exceed risk”.

Onchain data indicates that whales have steadily accumulated XRP over the past month, pointing to demand despite the weak price action. 

XRP risk-adjusted returns hint at limited long-term downside

Crypto analyst Arab Chain noted that the recent improvement in the Sharpe Ratio aligns with a pickup in trading activity, pointing to better returns for XRP holders in the long-term. The analyst explained that the ratio indicates a gradual positive rebalancing, which may limit further downside for the altcoin. Yet, the analyst added, 

“If the indicator falls back into negative territory, it could signal a return of volatility and weakening momentum.”

XRP Sharpe ratio on Binance. Source: CryptoQuant

Reinforcing the positive narrative, XRP whale flows have climbed to a 30-day moving average of $9 million per day. The positive flows have held since Feb. 27, marking the longest accumulation phase since April to July 2025.

The last accumulation phase in Q2 2025 led to XRP’s expansion rally to its all-time high of $3.65 on July 18, 2025. 

XRP Whale Flows on 30-day moving average (30-DMA). Source: CryptoQuant

The combination of a positive Sharpe Ratio reading and steady whale inflows points to an improving sentiment alongside accumulation. The gains are minimal, with the volatility relatively stable. This alignment places focus on whether the whale inflows may continue to support consistent returns over time.

Related: XRP price risks 50% drop despite Goldman Sachs' $152M ETF exposure

XRP open interest rises with fragile positioning

Crypto analyst Amr Taha noted that the 24-hour open interest change reached 14.8% on March 26, its highest level since March 4, indicating renewed trader participation. This rise in activity also coincides with repeated long-side pressure, with liquidation events above $2.5 million on March 18, followed by similar spikes of $2.45 million on March 21 and $2.15 on March 26.

XRP open interest change on Binance. Source: CryptoQuant

These moves show that aggressive long positioning is still being cleared during the short-term volatility. Thus, while the futures activity has risen, the frequent liquidation signals create an unstable market, where traders are exposed to continuous resets. 

The technical structure points to a clear bearish bias. XRP has invalidated its bullish ascending triangle pattern, declining 13.63% over the past 10 days. If the current market structure persists, the altcoin could retest support levels near internal liquidity at $1.27 and yearly lows at $1.11 in the coming weeks.

XRP/USDT on a one-day chart. Source: Cointelegraph/TradingView

Related: Bittensor's TAO price may plunge 40% within five weeks: Fractal data

US Senator Cynthia Lummis has dismissed claims that the Digital Asset Market Clarity Act fails to protect decentralized finance innovators from legal repercussions, rebutting that recent changes to the draft will make it the “strongest protection for DeFi and developers ever enacted.”

Her comments on Friday came in direct response to crypto lawyer Jake Chervinsky, who argued that Title 3 of the current draft undermines the Blockchain Regulatory Certainty Act — another crypto bill focused on developer protections — by subjecting non-custodial software developers to know-your-customer obligations.

“Don’t believe the FUD,” Lummis said, adding, “We have worked on a bipartisan basis for the last few weeks to make changes to Title 3 that make this bill the strongest protection for DeFi and developers ever enacted. We have to pass the Clarity Act to get these protections.”

The latest changes to the CLARITY Act have not been publicly released. 

Source: Cynthia Lummis

Chervinsky said these DeFi protection provisions have been overshadowed by intense focus on stablecoin rewards provisions in the CLARITY Act.

His biggest issue with the Senate Banking Committee’s latest CLARITY Act draft is that Title 3's money transmitter definitions could still expose many non-custodial DeFi builders to liability.

This is despite the CLARITY Act incorporating the BRCA in section 604, which clarifies that non-controlling developers and providers of non-custodial software are not to be treated as financial institutions subject to Bank Secrecy Act KYC obligations.

“The biggest challenge is ensuring non-custodial software developers aren't misclassified as money transmitters,” Chervinsky argued.

“That's non-negotiable for DeFi, and it's still unsettled.”

His concerns come amid several high-profile prosecutions and convictions of developers in the US in recent months, including Tornado Cash co-founder, Roman Storm, who was convicted in August 2025 of conspiracy to operate an unlicensed money transmitting business.

US lawmakers have said the CLARITY Act is moving closer toward a Senate Banking Committee markup expected in April after recent bipartisan progress on stablecoin rewards provisions.

Passage of the CLARITY Act is necessary to ensure DeFi developers are afforded legal protections under the BRCA, Lummis noted.

Magazine: Are DeFi devs liable for the illegal activity of others on their platforms?

Ripple CEO Brad Garlinghouse said stablecoins will be the crypto sector’s “ChatGPT moment” for businesses in search of faster, more efficient payments, and that many companies are already discussing and strategizing how to implement stablecoins into their operations.

“You have boards of directors and CEOs of companies, whether it’s Fortune 500 or Fortune 2000, they’re asking their treasurers, they’re asking their CFOs, hey, what are we doing with stablecoins,” Garlinghouse told FOX Business on Friday.

“Giving the treasurer and the CFO that option is the unlock,” he said. 

Garlinghouse said this unlock would be “the ChatGPT moment of crypto” because it would be the entry point for businesses to access a broader range of blockchain-based services. 

Garlinghouse speaking with FOX Business on Friday. Source: FOX Business

Bloomberg Intelligence predicted in early January that stablecoin flows could increase at a compounded annual growth rate of 80% to $56.6 trillion by 2030, a rise that would make stablecoins one of the most important payment tools in global finance.

Garlinghouse noted that stablecoins processed more than $33 trillion in trading volume last year, though nearly 90% of that came from Tether’s USDt (USDT) and Circle’s USDC (USDC).

Ripple launched a competitor stablecoin — Ripple USD (RLUSD) — in December 2024, which is currently the 10th largest stablecoin by market cap at $1.4 billion, CoinGecko data shows.

Ripple also strengthened its blockchain payments infrastructure last year with the acquisition of institutional-based prime brokerage Hidden Road for $1.25 billion and corporate treasury platform GTreasury for $1 billion.

Meanwhile, Garlinghouse said Ripple is set to have a “record quarter," adding that the company has been "on a tear” since the Hidden Road and GTreasury acquisitions.

Market structure legislation will push crypto industry forward

Garlinghouse said stablecoin payments and broader blockchain adoption would be accelerated by the CLARITY Act, should it pass Congress and be signed into law.

“A lot of eyes are on what is US regulation going to look like and is it going to get done," he said. "We want to make sure we can't have another Gary Gensler moment where they try to weaponize policy in a way that is about politics, not about what's good for the United States.”

Magazine: XRP yet to ‘price in’ 3 bullish catalysts, Bitcoin to $80K? Trade Secrets

Investment bank Morgan Stanley is seeking to launch its spot Bitcoin exchange-traded fund at a 0.14% fee, which would make it the cheapest in the US market and potentially force rivals to cut fees to stay competitive.

The 0.14% fee, proposed in Morgan Stanley’s latest S-1 registration statement on Friday, would be one basis point below the Grayscale Bitcoin Mini Trust ETF (BTC), currently the cheapest in the US market, and 11 basis points below the BlackRock-issued iShares Bitcoin Trust ETF (IBIT).

“Big move here. They are not messing around,” Bloomberg ETF analyst James Seyffart said, predicting that the Morgan Stanley Bitcoin Trust (MSBT) is “likely to launch in early April.”

Source: James Seyffart

Fellow Bloomberg ETF analyst Eric Balchunas said the low fee means that none of Morgan Stanley’s roughly 16,000 financial advisors — which manage $6.2 trillion in client assets — would feel conflicted in recommending the product to its clients.

Given that spot Bitcoin ETFs track the price movements of Bitcoin (BTC), Morgan Stanley’s ultra-low fee could spark a fresh fee war in the $83 billion market, putting immediate pressure on rivals to cut costs or risk losing assets.

Regulatory approval would make Morgan Stanley the first bank to issue a spot Bitcoin ETF, expanding access to Bitcoin exposure for millions of its high-net-worth clients.

“They are the ultimate gatekeepers of rich boomer money,” Balchunas added.

Morgan Stanley previously selected Coinbase and Bank of New York Mellon as the proposed custodians for its Bitcoin ETF.

Morgan Stanley seeking suite of crypto ETFs, banking charter

Morgan Stanley, previously one of the more crypto-hesitant Wall Street firms, filed for the spot Bitcoin ETF in the first week of January, along with a Solana (SOL) ETF.

It then filed papers for a staked Ether (ETH) ETF later that week, and by the end of the month, the bank appointed one of Morgan Stanley’s longest-standing executives, Amy Oldenburg, to lead its digital asset team.

Source: James Seyffart

Morgan Stanley also applied for a national trust banking charter on Feb. 18, seeking to custody certain digital assets and execute purchases, sales and swaps for clients in addition to staking services.

In October, before the investment bank adopted its institutional crypto strategy, it recommended a 2% to 4% allocation to crypto portfolios for investors. It also allowed its financial advisors to recommend crypto funds to clients with individual retirement accounts (IRAs) and 401(k)s.

Magazine: Bitcoin may face hard fork over any attempt to freeze Satoshi’s coins

California Governor Gavin Newsom signed an executive order on Friday, expanding rules to curb public servants and those close to them from benefiting from insider trading on prediction markets tied to political or economic events they can influence or are privy to.

The order prohibits “gubernatorial appointees,” public officials appointed to office by the governor of the state, from using “confidential or non-public information” gleaned from performing their duties to profit from related prediction markets.

Newsom’s executive order also extends the prohibition to include spouses, family members or former business partners of the appointed officials from using non-public information to profit. “Public service should not be a get-rich-quick scheme,” Newsom said. He added:

“At a time when Trump’s Washington is riddled with ethical failures and insider profiteering, California is drawing a bright line: If you serve the public as a political appointee, you serve the public — period. We’re not going to tolerate this kind of corruption in California.”

Governor Newsom’s executive order on government insiders using non-public information to profit from prediction markets. Source: California Governor

An announcement from Newsom’s office listed several instances of political insiders using non-public information to profit from prediction markets, including six suspected political insiders who profited from US strikes on Iran.

Newsom’s office also cited another case of suspected insider trading, which occurred in January, after one Polymarket trader netted $410,000 betting that the US would arrest former Venezuelan leader Nicolás Maduro hours before his capture.

Prediction markets have come under scrutiny from US lawmakers, who argue that political insiders are using the platforms to unfairly benefit from their positions and are potentially threatening national security by wagering on sensitive events like war and elections.

US lawmakers accelerate prediction market crackdown after insider allegations surface

Texas Congressman Greg Casar and Connecticut Senator Chris Murphy introduced the “Banning Event Trading on Sensitive Operations and ​Federal Functions (BETS OFF) Act” in March 2026 in response to the prediction market insider trading allegations.

The bill seeks to prohibit government insiders from using prediction platforms to profit from markets tied to war or death. 

Congressman Greg Casar announces the “Bets Off Act.” Source: Congressman Greg Casar

US Representative Adrian Smith and Representative Nikki Budzinski also introduced similar legislation in March, titled the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act.”

The legislative proposal prohibits the US President, lawmakers and other high-ranking government officials from betting on prediction markets.

Magazine: Train AI agents to make better predictions… for token rewards

Key takeaways:

Bearish sentiment is rising as Bitcoin options professional traders lose confidence that the $66,000 level will hold for long.

The exit of David Sacks as the Crypto and AI czar and a lack of a clear US Strategic Bitcoin Reserve plan added to investors’ doubts.

Bitcoin (BTC) fell to $65,530 on Friday, an 8% decline from the $71,300 level seen on Thursday. This move wiped out over $210 million in leveraged bullish Bitcoin futures and left most call (buy) options worthless during the $18.6 billion monthly expiry. Traders now anticipate a 53% chance that Bitcoin will stay below $66,000 by April 24.

April 24 Bitcoin option prices at Deribit. Source: Deribit

On Friday, the April 24 Bitcoin $66,000 put (sell) options traded at 0.0566 BTC or roughly $3,730. With a 53% implied probability of Bitcoin trading below $66,000 by late April, the mood remains decidedly bearish following the increased uncertainty in the US and Israel-Iran war, pushing traders into a risk-averse mode.

US inflation threats and stalling crypto, Bitcoin legislation

Rising oil prices and a potential $200 billion in extra US military spending led investors to demand higher returns on government bonds and dragged the S&P 500 to its lowest levels since September 2025. West Texas Intermediate (WTI) oil surged to $100 on Friday, while 5-year Treasury yields reached 4.07%, up from 3.72% three weeks prior.

US 5-year Treasury yield (left) vs. S&P 500 (right). Source: TradingView

Inflationary fear and weaker corporate earnings perspectives alone cannot explain Bitcoin’s 20% underperformance against the S&P 500 in 2026. Other factors are likely at play, including investors’ discomfort over the lack of progress on the US Bitcoin Strategic Reserve.

David Sacks has stepped down from his role as the Trump administration’s crypto and AI czar. While Sacks remains an advisor on the President’s Council on Science & Technology, his departure follows earlier comments that inflated Bitcoin investors’ expectations. Sacks had previously hinted that the US could acquire more Bitcoin through budget-neutral methods without raising taxes.

Bitcoin 30-day options delta skew (put-call) at Deribit. Source: Laevitas

The Bitcoin options delta skew jumped to 15% on Friday, showing that put options are trading at a significant premium relative to call instruments. In balanced market conditions, this metric usually ranges between -6% and +6%. The current level indicates a lack of conviction among whales that the $66,000 level will hold. Fear has largely dominated the Bitcoin options market since mid-January.

Bitcoin options expiry favored neutral-to-bearish strategies

Friday’s monthly options expiry at $68,610 proved unfavorable for neutral-to-bullish strategies, as 97% of call options became void. Bears gained the upper hand as put options at $69,000 or higher surpassed $2 billion in open interest. Critically, part of Friday’s downward move reflects a growing unwillingness among traders to maintain Bitcoin exposure over the weekend.

Crypto markets cut risk on Friday due to uncertainty. Source: X/WhalePanda

X social platform user WhalePanda, suggested that the crash in risk markets anticipates President Trump making "another dumb escalating move" after US markets close. Consequently, the current fear seen in the options market could reverse if no major geopolitical events occur before Monday.

During bearish cycles, traders often rush for the exits at the mere sight of any event that could be deemed negative. Investors should not take Bitcoin's implied odds at face value, as these metrics are heavily impacted by recent news and headlines. However, expectations could shift more favorably if Iran effectively releases a counter-offer to the US peace proposal.

Stablecoins are once again at the center of the crypto business narrative — but for very different reasons.

Circle’s sharp sell-off this week highlights how sensitive crypto equities remain to regulatory headlines, even when the underlying business fundamentals appear unchanged. At the same time, developments in Canada show institutions are moving in the opposite direction, quietly laying the groundwork for stablecoin integration into traditional finance.

Elsewhere, prediction markets are facing growing pressure to clean up their act as regulators zero in on manipulation risks, while a new thesis from Forrester suggests the long-promised micropayments economy may depend less on infrastructure — and more on AI agents.

The latest edition of Crypto Biz points to a market where regulation, automation and institutional adoption are reshaping how value moves across crypto rails.

Circle slides on CLARITY Act fears, Bernstein says sell-off overdone

Shares of Circle plunged 20% on Tuesday after reports that a draft of the proposed CLARITY Act could restrict stablecoin rewards, but analysts at Bernstein say the market reaction may be mispriced.

In a Wednesday note, Bernstein analysts said investors are conflating “who earns yield” with “who distributes yield.” The draft legislation targets platforms that pass yield to users, they said, while Circle’s core revenue comes from reserve income on USDC (USDC), not reward distribution.

The legislative proposal would prohibit yield on passive stablecoin holdings or products deemed equivalent to interest, but leaves room for rewards tied to user activity, such as trading or payments. Bernstein said these carve-outs could still allow incentive structures without disrupting issuer economics.

Circle generates revenue primarily from interest on reserves backing USDC, which are largely invested in short-term US Treasurys. Bernstein estimates this income reached about $2.6 billion in 2025, underscoring what it views as limited direct impact from the draft bill.

USDC’s onchain transaction volume has surged over the past two years. Source: Bernstein

Deloitte and Stablecorp prepare Canadian banks for stablecoins

Deloitte Canada is partnering with Stablecorp to bring stablecoin infrastructure into the country’s financial system, signaling growing institutional readiness ahead of new regulations. The initiative centers on integrating QCAD, a Canadian dollar–pegged stablecoin, into payment and settlement workflows.

The goal is to help financial institutions prepare for stablecoin adoption as Canada moves toward a formal regulatory framework for fiat-backed digital assets. Potential use cases include round-the-clock payments, faster settlement and improved transparency using blockchain-based systems.

QCAD is designed as a fully backed digital version of the Canadian dollar, aligning with expected regulatory requirements around reserves, compliance and risk management. This positions it as a candidate for institutional use once rules are finalized.

Source: Cointelegraph

Polymarket tightens rules as insider trading fears grow

Prediction platform Polymarket is overhauling its rulebook amid intensifying scrutiny of allegations of insider trading and market manipulation. The updates apply to both its decentralized platform and its US-regulated exchange, signaling a push toward stronger compliance standards.

The new framework introduces stricter market design rules, clearer criteria for resolving outcomes and expanded surveillance systems to detect suspicious activity. Polymarket is also limiting certain markets considered highly manipulable or ethically sensitive.

The changes come amid mounting concerns that prediction markets may be vulnerable to traders with privileged information — especially in geopolitical or political event markets. Lawmakers and regulators have increasingly questioned whether such platforms blur the line between financial markets and gambling.

Source: Polymarket

Forrester says AI agents could finally make micropayments work

AI agents may finally make micropayments viable, according to a new analysis from Forrester, which points to Stripe’s Machine Payments Protocol (MPP) as an early example of the trend.

Forrester analyst Meng Liu said micropayments have historically struggled due to user friction, as consumers are reluctant to repeatedly approve small transactions worth just a few cents or dollars. AI agents change that dynamic by executing payments automatically as part of completing tasks, removing the need for user interaction at checkout.

Stripe’s MPP is designed as a coordination layer that works across existing payment systems rather than a standalone network. Forrester’s Liu views this as a sign that infrastructure is emerging to support machine-to-machine transactions without requiring entirely new rails.

Liu said agent-driven payments could enable new business models, including pay-per-use services and automated digital commerce, while increasing demand for low-cost, high-frequency payment solutions such as stablecoins.

Liu said previous attempts to make micropayments viable have all failed. Source: Forrester

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The team behind the P2P.me decentralized trading platform disclosed that it opened positions on the Polymarket prediction market related to its recent capital raise.

The team opened the positions 10 days before the raise went live, wagering whether the project would hit its $6 million fundraising target, according to a disclosure published on the X social media platform.

At the time the positions were opened, P2P.me had only one “oral commitment” from venture firm Multicoin Capital for $3 million in funding, “no signed term sheets” and “no guaranteed allocations,” the team said. 

The Polymarket account for the P2P.me team shows an all-time profit of over $23,480. Source: Polymarket

However, the project only managed to raise $5.2 million in the funding round, which resulted in the market resolving to a “no.” Following the outcome, the team said:

“Trading on an outcome you can influence erodes trust. We don't believe we were trading on a done deal, but we recognize reasonable people can see it differently. We named the account "P2P Team" deliberately to give a marketing signal of our presence. But intent isn't the same as action. Not disclosing at the time was a mistake we own.”

Any profits made from the prediction market positions will be funneled back into the project’s MetaDAO treasury, the reserve for the decentralized autonomous organization (DAO) governing the platform, the P2P.me team said.

The team also said it is liquidating all open positions on Polymarket and adopting a “formal company policy” on prediction market trading activity.

Source: P2P.me

Cointelegraph reached out to P2P.me about the disclosure, but did not receive a response by the time of publication.

Prediction markets have come under increased scrutiny from US lawmakers for insider trading activity, and in response, popular prediction market platforms like Polymarket and Kalshi have announced countermeasures to curb insider trading.

US lawmakers take steps to curb insider trading activity on prediction markets

US lawmakers are seeking to restrict insider trading activity on prediction markets, particularly those linked to elections, legislation and geopolitical issues with national security implications.

Congress members Adrian Smith and Nikki Budzinski introduced the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act,” also known as the PREDICT Act, on Wednesday to ban the US president and lawmakers from prediction markets.

A competing bill was also introduced on Thursday, aiming to curb political insider trading activity on prediction market platforms.

Magazine: IronClaw rivals OpenClaw, Olas launches bots for Polymarket — AI Eye

Key points:

Bitcoin’s fall below the $66,000 support heightens the risk of a drop to the $62,500 level.

Select major altcoins have broken below their immediate support levels, opening the gates for further downside.

Bitcoin (BTC) is under pressure from the bears, who are attempting to sustain the price below the $66,000 level. The uncertainty regarding the US and Israel-Iran war is capping the upside and putting downside pressure. US spot Bitcoin exchange-traded funds recorded $171 million in outflows on Thursday, the biggest since the $348 million in redemptions on March 3, according to Farside Investors data. 

Although BTC is facing selling on rallies, the bulls have successfully defended the $60,000 level since Feb. 6. Glassnode said in its latest Week On-chain newsletter that the sharp contraction in BTC’s entity-adjusted realized profit from $3 billion per day in July 2025 to $0.1 billion currently suggests that the bear market is transitioning into its later stages.

Crypto market data daily view. Source: TradingView

A positive sign in favor of the bulls is that BTC whales and sharks have continued to accumulate. Santiment said in a post on X that large BTC holders owning between 10 and $10,000 BTC have boosted their holdings by 0.45% in the past month. Historically, an upside breakout happens when large wallets are accumulating, and retail is selling.

Could BTC and select major altcoins hold on to their crucial support levels? Let’s analyze the charts of the top 10 cryptocurrencies to find out.

Bitcoin price prediction

Buyers could not maintain BTC above the $72,000 level on Wednesday. That may have attracted sellers who pulled the price below the support line of the ascending triangle pattern on Friday. 

BTC/USDT daily chart. Source: Cointelegraph/TradingView

If the BTC price closes below the support line, the bullish pattern will be invalidated. That may intensify selling, pulling the BTC/USDT pair to the $62,500 to $60,000 support zone.

Instead, if the price turns up sharply from the current level and breaks above the $72,000 level, it suggests that the bulls are attempting to get back into the driver’s seat. The pair may then challenge the crucial $74,508 resistance. If buyers overcome the barrier, the pair may surge to $84,000.

Ether price prediction

Ether (ETH) turned down and fell below the breakout level of $2,111 on Thursday, indicating that the bears are trying to make a comeback.

ETH/USDT daily chart. Source: Cointelegraph/TradingView

Sellers kept up the pressure and pulled the ETH/USDT pair below the 50-day SMA ($2,044) on Friday. The ETH price may decline to the $1,900 level, which is likely to attract buyers. However, if the bears prevail, the pair may collapse to the vital $1,750 support.

This negative view will be invalidated in the near term if the price turns up sharply and breaks above the $2,200 level. That enhances the prospects of a rally above the $2,400 level. 

BNB price prediction

BNB (BNB) has been oscillating between $570 and $687 for the past few weeks, signaling buying near the support and selling close to the resistance.

BNB/USDT daily chart. Source: Cointelegraph/TradingView

There is minor support at $607, but if the level gives way, the BNB/USDT pair may slump to the $570 level. A strong bounce off the $570 support suggests that the pair may remain inside the range for a while longer.

The next trending move is expected to begin on a close below $570 or above $687. If buyers clear the overhead hurdle, the BNB price may jump to $790. Alternatively, a close below $570 might sink the pair to the psychological level at $500.

XRP price prediction

XRP (XRP) turned down from the moving averages on Thursday, indicating that the bears remain in control.

XRP/USDT daily chart. Source: Cointelegraph/TradingView

The XRP price may slide to $1.32 and then to $1.27. Buyers will attempt to aggressively defend the $1.27 level, but if the bears prevail, the XRP/USDT pair may decline to the support line.

The first sign of strength will be a close above the moving averages. The pair may then rise to the breakdown level of $1.61, which is expected to pose a substantial challenge for the bulls. If buyers pierce the $1.61 level, the next stop is likely to be the downtrend line.

Solana price prediction

Buyers attempted to push Solana (SOL) above the $95 resistance on Wednesday, but the bears held their ground.

SOL/USDT daily chart. Source: Cointelegraph/TradingView

The SOL price has dipped below the 50-day SMA ($86), indicating that the bulls have given up. That suggests the SOL/USDT pair may extend its stay inside the $76 to $95 range for some more time.

The next trending move is expected to begin on a break above or below the range. If the bulls propel the price above $95, the pair may reach the $117 level. On the downside, a close below $76 might sink the pair to $67.

Dogecoin price prediction

Dogecoin (DOGE) rose above the moving averages on Wednesday, but the bulls could not sustain the higher levels.

DOGE/USDT daily chart. Source: Cointelegraph/TradingView

The DOGE price turned down on Thursday, and the bears have pulled the DOGE/USDT pair below the critical $0.09 support. If the sellers sustain the price below $0.09, the pair may collapse to $0.06.

Buyers are unlikely to give up easily. They will attempt to defend the $0.09 level and swiftly push the price above the moving averages. If they succeed, the pair may ascend to $0.10 and later to $0.12.

Hyperliquid price prediction

Hyperliquid (HYPE) turned down from $41.59 on Wednesday but is likely to find support in the zone between the 20-day EMA ($37.64) and the breakout level of $36.77.

HYPE/USDT daily chart. Source: Cointelegraph/TradingView

If the HYPE price bounces off the $36.77 level, it suggests that the bulls are trying to flip the level into support. Buyers will endeavor to strengthen their position by pushing the HYPE/USDT pair above the $43.77 level. If they can pull it off, the pair may start its northward march toward $50.

Contrary to this assumption, if the price continues lower and breaks below $36.77, it suggests that the bulls are losing their grip. The pair may tumble to the 50-day SMA ($33.34), which is likely to attract buyers.

Cardano price prediction

Buyers pushed Cardano (ADA) above the 50-day SMA ($0.27) on Wednesday but could not sustain the higher levels.

ADA/USDT daily chart. Source: Cointelegraph/TradingView

The ADA/USDT pair turned down sharply on Thursday, signaling that the bears had renewed their selling. There is strong support at $0.25, but if the level breaks down, the ADA price may slump to $0.22.

This negative view will be invalidated in the near term if the price turns up sharply from the $0.25 level and closes above the moving averages. That clears the path for a rally to the downtrend line.

Bitcoin Cash price prediction

Bitcoin Cash (BCH) fell below the 20-day EMA ($468) on Thursday, indicating that the bears are attempting to retain control. 

BCH/USDT daily chart. Source: Cointelegraph/TradingView

The BCH/USDT pair may descend to the $443 support, which is a crucial level to watch out for. If the bears sink the BCH price below the $443 level, the pair will complete a bearish head-and-shoulders pattern. That may start a drop to $375.

On the contrary, if the price turns up from the $443 level, it signals solid buying at lower levels. The pair may form a range between $443 and the 50-day SMA ($491) for some time. Buyers will have to push and maintain the price above the 50-day SMA to signal the start of a sustained recovery toward $520.

Chainlink price prediction

Chainlink’s (LINK) rebound fizzled out at $9.50 on Wednesday, indicating that the bears are selling on rallies.

LINK/USDT daily chart. Source: Cointelegraph/TradingView

The price turned down sharply on Thursday, and the bears have pulled the LINK/USDT pair below the support line of the ascending channel pattern. If the LINK price closes below the channel, the pair may drop to $8.05 and then to $7.15.

Buyers are likely to have other plans. They will attempt to retain the price inside the channel and push the pair above the $9.50 level. If they do that, the pair may rally to the resistance line.

Lawyers representing the US city of Detroit plan to file an amicus brief in Coinbase's lawsuit against Michigan, which argues that federal regulators should have authority in overseeing prediction markets and not states. 

In a Thursday filing in the US District Court for the Eastern District of Michigan related to state officials’ motion for a preliminary injunction, District Judge Shalina Kumar approved an order which will allow Detroit to file a brief supporting state authorities in their lawsuit against Coinbase. Kumar gave Detroit’s lawyers until April 3 to make the filing as the lawsuit continues. 

Source: US District Court for the Eastern District of Michigan

In December, Coinbase filed its lawsuit against Michigan, as well as gaming authorities in Connecticut and Illinois, more than a month before the crypto exchange announced the launch of its prediction market services on the platform.

The company’s argument is centered on claims that prediction markets fall under the purview of the US Commodity Futures Trading Commission (CFTC) rather than state gambling regulators, challenging Michigan’s enforcement.

Companies offering event contract bets on prediction markets like Coinbase, Kalshi and Polymarket already face state-level lawsuits in multiple jurisdictions. Although the platforms have been supported by efforts from CFTC Chair Michael Selig, who proposed new rules for the commission, it was still unclear as of Friday how the legal battle between state authorities and federal regulators would unfold.

Where will the chips fall for platforms dealing with state and federal authorities?

“The more the CFTC can do in this space [prediction markets] to put a comprehensive regulatory regime around it, the more likely it is for courts who are looking at the issue to say ‘actually, yes, this is a CFTC jurisdiction issue — this really is not just an end run around sports gambling bans in particular states,’” Stephen Piepgrass, a partner at international law firm Troutman Pepper Locke, told Cointelegraph.

According to Piepgrass, the cases could ultimately end up going back to the US Supreme Court, given its 2018 decision in Murphy v. National Collegiate Athletic Association. That case gave US states the authority to regulate sports gambling, striking down a federal law that attempted to impose a ban on such activities.

US states have largely pushed back against lawsuits over prediction markets, but courts have sided with the platforms in some cases.

This month, a judge ordered Kalshi to temporarily stop operating in Nevada, and the platform faces criminal charges in Arizona over alleged illegal gambling on sports and elections. However, a Tennessee judge blocked state authorities from enforcing gambling laws against the platform in February.

The Michigan Gaming Control Board reported that casinos based in Detroit casinos generated more than $200 million in revenue for January and February, providing more than $24 million in taxes for the US state.

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US Representatives Max Miller and Steven Horsford published a discussion draft bill on Thursday titled the ‘‘Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act’’ or the ‘‘Digital Asset PARITY Act,” to overhaul the tax code for digital assets.

The Digital Asset PARITY Act seeks to overhaul the Internal Revenue Code of 1986 by adding provisions that would clarify the tax treatment of digital assets.

The legislation said that stablecoins are not subject to gains if the cost basis, or the amount paid by the investor, does not fluctuate by more than 1% of $1 or $0.01, according to the discussion draft. 

Transaction costs incurred to acquire or move regulated dollar-pegged stablecoins cannot be counted toward an investor’s cost basis, according to the bill.

The Digital Asset PARITY Act. Source: Digital Chamber

The bill also introduces a de minimis tax exemption for stablecoin transactions below $200, meaning that stablecoin transactions below the $200 threshold do not trigger tax or reporting requirements. A total annual exemption cap is yet to be determined. 

Income from lending, staking or income earned through “passive” validator services is treated as part of the recipient's gross income every year, and calculated using “fair market” value, the draft said. 

The Digital Asset PARITY Act has not yet been introduced to Congress; it was published as a discussion draft to open up debate between lawmakers, stakeholders and the crypto industry about how to overhaul crypto tax policy in the US.

Rep. Steven Horsford, pictured center, and Rep. Max Miller, pictured right, speak about the future of crypto policy at the DC Blockchain Summit. Source: Digital Chamber

Crypto tax proposal highlights schism in the crypto industry

“We need digital asset tax clarity or activity will never fully onshore,” Cody Carbone, the CEO of crypto advocacy organization Digital Chamber, said in response to the discussion draft.

However, Bitcoiners noted that the bill includes only a de minimis tax exemption for stablecoins, not Bitcoin (BTC), similar to pending legislation, including the CLARITY crypto market structure bill, which also lacks a BTC de minimis tax exemption.

“This is the wrong direction to go in,” Pierre Rochard, CEO of The Bitcoin Bond Company, a BTC financial product issuer, said about the draft.

“It’s Bitcoin that should have a de minimis tax exemption. Stablecoins are not decentralized, and they are not permissionless. They’re not real money; they’re just fiat,” he added.

Magazine: How crypto laws changed in 2025 — and how they’ll change in 2026

Negative reactions to cryptocurrency exchange Coinbase using its notifications to push bets on event contracts amid the March Madness basketball tournament range from “annoying” to “absurd.”

In January, Coinbase rolled out prediction market bets for US-based users as part of a partnership with Kalshi. However, for some users, the last two months have been seen as an opportunity for the exchange to get people “hooked on sports gambling” using an app that many had devoted to crypto trading.

“I have received three separate notifications about College Basketball from Coinbase in the past *hour* alone,” said X user AvgJoesCrypto on Thursday. “It is absurd that, amidst arguably the worst collapse in trust in this industry’s history, the largest American CEX has completely pivoted to trying to get their customer base hooked on sports gambling, so that they can extract even more exorbitant fees.”

Source: Ariel Givner

Like sports event contract betting on platforms such as Kalshi and Polymarket, Coinbase Prediction Markets offers US-based users the chance to bet on the outcomes of a variety of events.

Prediction market platforms already face several lawsuits filed by state-level authorities, even as the federal regulator, the US Commodity Futures Trading Commission (CFTC), pushes for “exclusive jurisdiction” over the market.

John Palmer, co-founder of PartyDAO, expressed a similar sentiment over the Coinbase notifications, pushing bets on March Madness games:

“This is essentially encouraging me to gamble. What does that say about the internal philosophy around money management? Can I trust the yield sources on USDC interest, can I trust internal risk management, etc.”

In December, before the launch of its prediction market service, Coinbase filed lawsuits against regulators in Connecticut, Illinois and Michigan. The exchange argued, likely in anticipation of its prediction market launch, that the CFTC, not state-level gambling authorities, should regulate the platform.

Cointelegraph contacted Coinbase for comment on the user complaints, but had not received a response at the time of publication.

Congress seeks to ban politicians from using prediction markets amid insider information allegations

Amid user feedback and state-level lawsuits, many US lawmakers have also been calling for legislation to address issues in prediction markets. Allegations of someone in government using Polymarket to profit from a bet on the removal of Venezuelan President Nicolás Maduro have led to bills seeking to ban any US President or member of Congress from using the platforms.

Both Kalshi and Polymarket have introduced separate policies to curb insider trading. Kalshi said it would ban political candidates from trading on event contracts related to their campaigns, and Polymarket introduced measures to limit easily manipulated or ethically sensitive markets.

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