This week decoded
All eyes are on Tuesday: the midterms will determine the digital asset policy agenda for the next two years. In the final stretch before Election Day, prediction markets and the Binance hack drew lawmakers’ attention.
The CFTC announced an information-sharing agreement with the NBA aimed at curbing insider trading in sports prediction markets. Meanwhile, the OCC and CFTC each moved to get ahead of the narrative on their own agendas.
Read more below
Congress
Hearings
Congress returns next week.
Correspondence
Sens. John Curtis (R-UT) and Elizabeth Warren (D-MA) sent a letter to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan requesting information about how each company prevents political insiders from self-dealing, wash trading and other forms of market manipulation that could artificially influence specific elections. (Letter)
Trump Administration
Securities and Exchange Commission (SEC)
The SEC published the Division of Examinations’ Fiscal Year 2027 report on examination priorities, including “risks associated with evolving market infrastructure, including Treasury clearing reforms, tokenization, and related developments.” (Report)
Commodity Futures Trading Commission (CFTC)
The CFTC and the National Basketball Association announced a Memorandum of Understanding agreement to share information by regularly communicating and discussing matters relating to integrity, as well as maintaining fair and transparent prediction markets. (Press release)
Noteworthy Quotes
ADMINISTRATION
Commodity Futures Trading Commission (CFTC)
Chair Mike Selig posted “Congress entrusted the CFTC with the responsibility of ensuring uniform national regulation of prediction markets under a single federal rulebook. As I’ve said before, the agency has the expertise and authority to defend its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll do.”
Selig also posted “Crypto markets deserve the same time-tested protections that have governed America’s derivatives markets for generations. While Congress has yet to act, the CFTC is advancing a voluntary federal registration pathway for crypto exchanges, bringing them closer to the gold standard of American market oversight.”
Selig also posted “I’m pleased the CFTC and NBA have signed an MOU continuing the Commission’s commitment to increasing data sharing between the agency and professional sports leagues. The NBA joins the MLB and NHL in taking a responsible step toward protecting sports integrity and market participants from abuses in prediction markets like insider trading and fraud. I thank NBA Commissioner Adam Silver for putting the integrity of professional basketball and America’s financial markets first and for working with the agency on this MOU”
Office of the Comptroller of the Currency (OCC)
OCC posted “The OCC wants community banks to help shape the future of payments and is encouraging the development of payment stablecoin capabilities within the community banking sector. Interested community banks are encouraged to consider applying to become, or for a subsidiary to become, a permitted payment stablecoin issuer, as applicable. These opportunities complement the OCC’s Community Bank Comeback initiatives to right-size regulation and tailor supervision so community banks can grow, compete, and continue serving their communities.”
CONGRESS
Binance Hack
Rep. William Timmons (R-SC) posted “North Korea is suspected of stealing $6.3 BILLION from Binance in the largest crypto heist in history. This isn’t just financial crime. It’s a national security threat. We must follow the money, expose those responsible, and hold them accountable. America cannot allow rogue regimes to exploit digital assets to finance their nuclear weapons and ballistic missile programs.”
Sen. Cynthia Lummis (R-WY) posted “Nice try, but what you’re citing is a savings clause. It keeps existing finance and sanctions law in force but it doesn’t erase the rest of the section. What you fail to understand about the Clarity Act is that it would classify Binance as a covered person because it is a digital asset service provider. No law stops every bad actor, but the Clarity Act would have given the people fighting them better tools and the ability to act faster. Your party voted no, and you have to own that. Thanks for playing, Amanda Fischer!”
Lummis also posted “Yesterday, hackers stole more than $6 billion from Binance in less than 4 hours, the biggest heist in history. The Clarity Act would have given crypto firms legal cover to freeze suspicious transactions the instant law enforcement calls. Every minute lost is money gone for good.”
Prediction Markets
Sen. Elizabeth Warren (D-MA) posted “As Americans place prediction market bets on elections, reporting shows that insiders have cashed in. SenJohnCurtis and I have serious concerns about election-related fraud on prediction markets, and whether the platforms are doing enough to prevent it.”
Sen. Richard Blumenthal (D-CT) posted “Prediction markets appeal, addict, & endanger young lives—just like sports betting. It’s gambling. Calling out from the casino in your pocket. Pitching kids, problem bettors, all of us. It cries out for regulation, just like gambling.”
Rep. Steven Horsford (D-NV) posted “Calling it a prediction market doesn’t make it any less of a gamble. As the gaming industry raises concerns about financial literacy and consumer protections, we can’t ignore the risks these platforms pose, especially to young people. That’s why I introduced the bipartisan Prediction Markets Are Gambling Act with Rep. Mark Amodei to close loopholes that let sports betting platforms bypass state gaming laws. Nevada has spent decades building a regulated gaming industry that protects players, supports workers, and generates revenue for our communities. Innovation shouldn’t come at the expense of public safety or Nevada jobs.”
CLARITY Act
Sen. Cynthia Lummis (R-WY) posted “Democrats asked for $150 million so the CFTC could police crypto markets. The Clarity Act authorizes it. Democrats voted against funding the cops who catch crypto fraudsters.”
Lummis also posted “Democrats wanted crypto brokers to be required to get customers the best available prices on every trade. The Clarity Act requires it. Democrats voted against making sure Americans get a fair price.”
Lummis also posted “Democrats demanded that the SEC have the power to deny, suspend, or revoke a crypto project’s certification for material misstatements or omissions. The Clarity Act gives the SEC that power. Democrats still voted no.”
WHAT I’M READING THIS WEEK
North Korea Steals USD 6.36 Billion From Binance in the Largest Hack in History, TRM Labs.
How Binance’s $6.3 Billion Hack Went Down, David Yaffe-Bellany, The New York Times.
Binance’s $6.3 Billion Hack Is Just the Start of a Risky New Era, David Yaffe-Bellany and Dustin Volz, The New York Times.
About Zero One Strategies
Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.
The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.
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