Will Congress fix crypto regulation before it’s too late? Behnam says the lack of legal clarity leaves the CFTC “handcuffed” as the crypto market continues to evolve.

CFTC is “handcuffed”

U.S. Commodity Futures Trading Commission Chair Rostin Behnam is raising concerns, and it’s not just about the growing complexity of the crypto market. 

Behnam, a longtime advocate for clearer rules in the digital asset space, is now urging Congress to address two critical issues: crypto regulation and election betting.

In recent remarks at a key industry meeting, Behnam irked that as technological disruption accelerates, the absence of clearer legal frameworks leaves regulators like the CFTC “handcuffed.”

Without action from Congress, the risks to both investors and the integrity of U.S. markets will continue to rise. But with an election year approaching and political obstacles mounting, will lawmakers act in time to close these gaps — or will we remain in the dark?

The unfinished business of crypto regulation

Behnam’s call for action on cryptocurrency isn’t new, but the stakes have never been higher. The quick ascent of digital assets, from Bitcoin (BTC) to decentralized finance, has left the regulatory framework struggling to catch up.

Several bills, like the Financial Innovation and Technology for the 21st Century Act, aim to provide some clarity, but they remain stuck in legislative limbo. 

FIT 21, which passed the House of Representatives earlier this year, would grant the CFTC greater authority over “digital commodities” like Bitcoin. However, progress has yet to be made in the Senate.

FIT 21, for instance, proposes clearer tests to determine whether a digital asset is a commodity or a security, but it also raises new questions. How should regulators define decentralization? 

More importantly, who gets to decide which assets are decentralized enough to be classified as commodities and which fall under securities laws? 

And to top it all off, there is the pressing dilemma of over-interference by the U.S. Securities and Exchange Commission and its current chair, Gary Gensler, a known crypto critic, whose policies and administration are considered by many to have done more harm than good.

Hence, without a well-defined legal framework, the CFTC finds itself in a difficult position — able to enforce some rules but unable to fully protect investors. 

This regulatory gap, Behnam argues, exposes markets to bad actors and discourages institutional investors from entering the space with confidence. 

Behnam doesn’t expect Congress to take meaningful action this year due to the holidays and the urgency of passing a federal budget. 

“I think as we look into 2025, with a new Congress and potentially a new president, you’re likely to see some legislation,” he noted.

Growing chaos of election betting

While the crypto market faces regulatory ambiguity, the rise of election betting platforms like Kalshi and Polymarket has thrown the CFTC into a legal battle it didn’t foresee.

Kalshi, a prediction market where users can bet on election outcomes, clashed with the CFTC when the agency deemed election contracts illegal, arguing that they could undermine public trust in democratic processes.

This wasn’t the first time the CFTC cracked down on such platforms. Polymarket, another prediction market built on the Polygon (POL) blockchain, was fined $1.4 million in 2022 for operating without proper regulatory compliance, forcing it to halt operations for U.S. residents.

The debate intensified when Kalshi sued the CFTC in 2023, resulting in a court ruling in favor of the platform in September 2024. The judge found that the CFTC had exceeded its statutory authority by blocking Kalshi’s election contracts.

The agency quickly appealed the decision, but Kalshi resumed bets on the 2024 U.S. presidential election. This has raised alarms, not only from regulators but also from prominent voices in the industry.

Billionaire investor Mark Cuban, a vocal critic of these platforms, expressed concerns that betting markets could be skewed by foreign influence or market manipulation. “These odds aren’t indicative of anything meaningful,” Cuban commented.

On the other hand, figures like Peter Thiel, the tech billionaire, have financially backed Polymarket, viewing it as a tool for harnessing market sentiment.

With billions of dollars flowing through these platforms during election cycles, Congress’s delayed action could make it harder to control prediction markets and protect the integrity of U.S. elections.

Betting markets thrive despite legal scrutiny and criticism

As the U.S. election cycle races to its conclusion in just two weeks, prediction markets like Kalshi and Polymarket are witnessing unprecedented activity despite ongoing legal battles and heavy criticism.

Kalshi, which launched its election prediction contracts in October after winning a court case against the CFTC, has gained some momentum.

The platform has attracted over $47 million in trading volume for its main U.S. election contract as of Oct. 22, a strong start for a platform that’s been in and out of courtrooms.

However, Kalshi’s volume still trails behind its larger, more established competitor Polymarket, which has surpassed $2.16 billion in total trading volume.

Polymarket saw $40 million in trades just in the first month of its presidential betting from January to February 2024, driven by global participation, as the platform operates without requiring U.S. traders or a know-your-customer process.

This distinction between the two platforms highlights their differing approaches: Kalshi’s regulatory compliance limits trading to U.S. nationals and permanent residents, while Polymarket, operating in the gray zone of offshore markets, attracts a broader, global user base.

Interestingly, both platforms show similar trends in election outcome predictions. On Polymarket, Donald Trump currently holds a 64% chance of winning, while Kamala Harris trails with 36%.

Kalshi shows a similar trend, though with slightly different margins — Trump leads with 59%, while Harris follows with 41%. Despite the differences in platform operations, the betting sentiment appears consistent across the board.

Kalshi, being the regulated platform, faces less risk of market manipulation accusations, which have often been directed at Polymarket.

Critics of Polymarket argue that its lack of KYC requirements opens the door to foreign interference and shadowy money pushing odds in certain directions.

In the face of all the criticism and noise, both platforms are thriving, each offering a unique snapshot of how people perceive the election’s outcome.

As the election draws nearer, these platforms will likely remain at the center of both market activity and regulatory debates, proving that prediction markets are not only alive but booming, even under scrutiny.

Trump’s crypto plans sound perfect on paper — but what’s the catch? Could Harris’ understated approach hold the key to a safer, smarter crypto future?

As the 2024 U.S. presidential race enters its final stages, both Donald Trump and Kamala Harris are ramping up efforts to woo a growing but often overlooked group of voters — crypto voters.

Trump, with his newly launched World Liberty Financial (WLF) token and plans for a “Bitcoin (BTC) and Crypto Advisory Council,” has positioned himself as a vocal supporter of crypto and decentralized finance.

On the other hand, Vice President Harris has quietly begun outlining policies aimed at protecting crypto investors, particularly in Black communities, through her Opportunity Agenda.

Let’s dive deeper into what Trump and Harris are offering to the crypto community, how their policies stack up, and what it means for voters who are hoping to see clearer regulations—and maybe a little more digital coin in their pockets.

Trump’s crypto courtship

Donald Trump has transformed his stance on crypto in a way that speaks directly to a key group of voters, a calculated move to tap into the rising influence of the crypto community in America.

It all started in May when Trump’s campaign began accepting crypto donations, a notable change from his earlier skeptical views. This was followed by several strategic moves aimed at convincing the crypto community that he’s their candidate.

By June, Trump publicly threw his support behind Bitcoin miners, expressing his hope that the remaining Bitcoin would be mined “right here in America” – a key message for those concerned about the exodus of mining operations to countries like Russia and Kazakhstan.

But Trump didn’t stop there. His appearance at the Bitcoin Conference in Nashville at the end of July marked a crucial moment in his crypto campaign.

Standing before a packed room of crypto advocates, Trump not only promised to establish a national Bitcoin reserve if elected—an unprecedented move—but he also vowed to fire SEC Chairman Gary Gensler.

This promise, met with a standing ovation, struck a chord with crypto voters, many of whom see Gensler as an obstacle to the industry’s growth due to his firm stance on regulating digital assets like stocks and bonds.

The creation of a national Bitcoin reserve, paired with his pledge to form a Bitcoin and Crypto Advisory Council, set him apart from his opponents, especially in a political arena where other candidates have remained cautious on crypto.

Beyond policy promises, Trump has also made highly visible gestures to show his support for crypto. During a campaign stop at Pubkey, a Bitcoin-themed bar in New York, Trump became the first former U.S. president to use cryptocurrency in a transaction, buying a dozen burgers using Bitcoin.

At the center of Trump’s crypto efforts lies his personal project, WLF, a DeFi platform launched in September 2024. Marketed as a crypto bank where users can borrow, lend, and invest, WLF is clearly designed to lure crypto voters by offering them something tangible.

The platform’s native token, WLFI, was introduced with much fanfare, aiming to raise $300 million at a valuation of $1.5 billion. Yet, the project has struggled to meet its ambitious goals, with only $12.9 million raised so far.

More controversial is the token allocation—Trump and his family are poised to receive 75% of the net protocol revenue, raising questions about transparency and how much of the project is for the benefit of its users versus the Trump family.

WLF claims to be apolitical, yet the timing and Trump’s heavy involvement make it clear that this is as much a political play as it is a financial one. The project’s roadmap includes bold promises, but its slow progress and the outsized financial benefits for the Trump family have sparked skepticism.

Still, Trump’s supporters view the project as part of his broader narrative of financial independence and American economic strength, tied neatly to his political messaging.

Harris’s cautious approach to crypto

While Trump has taken an aggressive and hands-on approach to wooing the crypto community, Kamala Harris has chosen a more measured path.

Harris, the current Vice President, has not made crypto a centerpiece of her campaign, but recent moves suggest she is aware of the growing importance of digital assets and their impact on voters.

The first real signs of Harris’ approach came during a roundtable event at the Democratic National Convention in Chicago, where her senior campaign adviser, Brian Nelson, shed some light on her potential policies.

Nelson made it clear that Harris intends to support policies that allow emerging technologies like crypto to grow while ensuring they are adequately regulated. Though the message was vague, it marked the first public stance from Harris’ camp on the matter.

This careful dance became more apparent when Harris recently introduced her “Opportunity Agenda”, a broader economic plan aimed at improving financial inclusion.

One key aspect of this agenda is the protection of crypto investors, particularly Black Americans, a demographic where over 20% own or have owned digital assets.

Harris has promised to build a regulatory framework to ensure that the benefits of crypto can be enjoyed safely without the risks of fraud, volatility, or market manipulation.

However, while Harris has started laying out her views on paper, her direct engagement with the crypto community has been rocky at best.

A virtual town hall hosted by the ‘Crypto For Harris’ campaign was supposed to be a moment to rally support from the digital asset space, but the event fell flat.

Lacking interaction and with Harris herself notably absent, the town hall left prominent figures like Tyler Winklevoss and Jake Brukhman frustrated.

Winklevoss went as far as to call it a “clown show,” while Brukhman criticized the format for failing to capture the essence of a town hall—engagement and dialogue.

The event, instead, relied on pre-recorded speeches from political allies like Senators Gillibrand and Schiff, making it feel more like a lecture than a conversation.

Despite the misstep, Senate Majority Leader Chuck Schumer, a major Democratic figure, did his best to fill the gap, emerging as a surprise ally for crypto. Schumer promised that crypto is “here to stay no matter what” and pledged to push for sensible regulation before the end of the year.

Interestingly, Harris’ campaign has also received quiet support from notable crypto figures. Chris Larsen, the co-founder of Ripple (XRP), has donated over $1 million in XRP to Harris’ campaign, expressing confidence that she would bring a “more pragmatic approach and clear rules” to the crypto industry — something he believes is missing under the current administration led by SEC Chairman Gensler.

While Harris hasn’t gone as far as Trump in embracing crypto, she’s also made subtle moves to distance herself from the more anti-crypto voices within the Democratic Party, such as Senator Elizabeth Warren.

Her cautious approach might not generate standing ovations like Trump’s promises to fire Gensler or create a Bitcoin reserve, but it offers a path for crypto that leans toward stability and investor protection — appealing to voters who seek progress without the chaos.

What are the odds?

As the 2024 presidential race intensifies, the odds of each candidate winning have shifted dramatically in the past few days, and the crypto market’s bullish sentiment might be playing a role.

According to a popular betting contest on Polymarket, which has attracted over $2.06 billion in bets, Trump currently holds a 60.1% chance of victory, compared to Harris’ 39.8%.

This is a stark contrast to just a few weeks ago when the two were neck and neck at nearly 50% each. In fact, in mid-September, Harris was leading with a 52% edge over Trump’s 46%.

A lot has changed in the past few days, particularly in the crypto market. The newfound bullishness in digital assets, particularly Bitcoin, seems to be influencing voter sentiment.

As of Oct. 18, Bitcoin is trading just shy of $70,000, hovering around $68,700, its highest levels in months, reflecting the growing impact of the crypto market on political outcomes.

As we head closer to Election Day, the tides could shift again, depending on the performance of the crypto market and any last-minute developments from both campaigns. The coming days will be critical in defining both the race and the future of crypto policy in the U.S.

Until President Biden dropped out of the race in July, it seemed like Trump was the clear favorite within the crypto community. In the aftermath of the failed assassination attempt on July 12th, bitcoin jumped from $56,000 to $65,000, on the back of expectations that the former president would benefit from the incident. Trump’s view on crypto seems to have changed over the years. As president, he voiced skepticism over crypto, claiming that they could be used to facilitate illegal activities such as drug trafficking. He also mentioned at one point that he sees bitcoin as a currency competing against the dollar. In more recent times however, he wholeheartedly embraced crypto, pledging that he wants the U.S. to become a “bitcoin superpower” and the “crypto capital of the planet” under his leadership. His campaign has started accepting bitcoin donations. He also mentioned that he would replace SEC Commission Chair Gary Gensler, a notoriously disliked figure among crypto proponents. This pivot seems to have worked. Most of the crypto community is seemingly rallying behind Trump.