Lawmakers debate crypto taxes as CFTC, courts intensify regulatory push
In brief
- House Ways and Means Committee held hearing on crypto tax legislation with minimal partisan conflict
- CFTC published proposal regulating prediction markets, including gaming definitions
- Gary Gensler filed amicus brief arguing 'swaps' excludes sports betting
- Sam Bankman-Fried's fraud conviction appeal rejected by appellate court
- Crypto taxes expected as next major legislative priority after market structure bill
Tax legislation gains traction
The House Ways and Means Committee held a hearing to work through crypto tax legislation, marking a substantive shift in legislative momentum. Members asked largely technical questions about how cryptocurrency taxation would function in practice. The tone was notably bipartisan—there was no sniping at each other, no real pot shots at President Donald Trump and his family and no major arguments.
This represents a departure from earlier crypto hearings, where partisan posturing often overshadowed policy substance. Lawmakers appear focused on understanding the mechanics of taxation rather than scoring political points.
CFTC and courts shape prediction markets
The regulatory machinery is moving on prediction markets from multiple angles. The Commodity Futures Trading Commission put out a proposal for regulating prediction markets, and part of this proposal includes how the agency would define gaming for the purposes of establishing what prediction markets fall under its purview.
Simultaneously, the CFTC filed another lawsuit against New Mexico on Friday, arguing that sports-related prediction markets are still swaps under existing law. Gary Gensler, the former SEC and CFTC chair who had a major role in the creation and implementation of Dodd-Frank, filed an amicus brief in one of these cases, arguing that the term "swaps" was never meant to include anything that could look like sports betting.
The contradiction is striking. Gensler—who shaped Dodd-Frank as CFTC chair—now argues against the CFTC's interpretation of the very law he helped write.
Criminal appeals and SEC delays
Sam Bankman-Fried lost his appeal of his 2023 conviction on fraud and conspiracy charges. A Second Circuit Court of Appeals panel rejected the appeal, closing one chapter in the FTX saga while his legal team considers next steps.
On the SEC side, the proposal's public release has already been delayed for its innovation exemption, which was intended to give startups regulatory clarity. Legal experts have raised concerns about the framework.
What's next
Crypto taxes are the next big issue after the market structure bill happens (if it happens, anyway). The House committee's substantive tone suggests the legislative environment may be shifting toward pragmatism over rhetoric—though passage remains uncertain.
Frequently asked questions
Why is Gary Gensler filing a brief against the CFTC's position?
Gensler argues that the term 'swaps' under Dodd-Frank was never meant to include sports betting or prediction markets. He filed an amicus brief opposing the CFTC's lawsuit against New Mexico, which claims sports-related prediction markets are swaps. The disagreement highlights tension in how the law he helped create is now being interpreted.
What does the CFTC's prediction market proposal include?
The proposal includes defining 'gaming' to establish which prediction market contracts fall under CFTC jurisdiction. This definition is central to determining regulatory boundaries for the emerging prediction market industry.
What happened with Sam Bankman-Fried's appeal?
A Second Circuit Court of Appeals panel rejected his appeal of his 2023 conviction on fraud and conspiracy charges. This closes one legal avenue for Bankman-Fried, though further appeals may be possible.
