The two major Wall Street regulatory agencies join forces, is the "barbaric era" of cryptocurrencies and prediction markets coming to an end?

The Wall Street regulatory agencies are advancing plans to oversee the cryptocurrency industry and the surge in prediction markets, which could have far-reaching impacts on the broader financial markets.

After months of public statements from regulators and political battles in Congress, the Securities and Exchange Commission (SEC), which regulates the US stock market, and the Commodity Futures Trading Commission (CFTC), which oversees derivatives trading, have submitted plans to the White House. While details are still unclear, this bureaucratic step is one of the most significant moves by the Trump administration’s market regulators to date.

Since Trump took office last year, US financial regulators have significantly reversed their approach—taking a much more friendly stance toward digital assets and so-called “event contracts” compared to the Biden era. The plans implemented under Trump could ultimately provide a formal roadmap for these industries and institutionalize the currently moderate regulatory approach.

Both industries have recently moved closer to mainstream finance. Prediction markets have surged into a multi-billion dollar industry, and digital asset companies have gained support from the president, who aims to make the US a global “cryptocurrency hub.” Now, in a favorable political environment, these industries are poised to receive clear guidelines they’ve long been pushing for, with regulators taking a key step this week.

The White House Office of Information and Regulatory Affairs (OIRA) received an important cryptocurrency regulation measure from the SEC on Tuesday, in the form of a commission-level guidance. According to an announcement on the OIRA website, the matter involves “the applicability of federal securities laws to certain types of crypto assets and transactions involving crypto assets.”

When asked about the project, an SEC spokesperson referenced Chair Gary Gensler’s previous remarks, stating that the regulator will consider developing interpretive guidance around token taxonomy for cryptocurrencies—aiming to align with market structure legislation—to ensure investors and innovators clearly understand their regulatory obligations.

In theory, token taxonomy could establish formal categories for different types of crypto assets—such as determining whether a specific token is considered a security regulated by the SEC or falls under the CFTC’s jurisdiction. This distinction could have significant consequences for how crypto companies register, disclose, and operate.

Commission-level guidance indeed requires a vote by the commission and is considered more binding than staff-level statements. However, it has not yet gone through the full legislative process involving public notice and comment.

Gensler has previously emphasized that legislation on digital assets is a cornerstone of his policy agenda. While he has repeatedly stated that Congress passing crypto market structure legislation would be preferable, he also commented that the agency has significant authority to advance rules for digital assets if needed.

A bill aimed at providing a regulatory framework for digital assets stalled earlier this year in the Senate, partly due to conflicts between the banking industry and crypto firms, focusing on whether companies like Coinbase have the authority to offer rewards to customers holding stablecoins on their platforms. In recent weeks, representatives from the banking and crypto sectors have met multiple times at the White House in an attempt to reach a compromise.

Prediction Markets

In addition to prioritizing cryptocurrencies, Trump-era regulators also embraced prediction markets, which allow clients to bet on the outcomes of various events, from presidential elections to college basketball.

Another announcement on the OIRA website shows that after the White House received the project on Monday, it is reviewing measures from the CFTC regarding prediction markets. Typically, once OIRA completes its review and the CFTC formally issues the measure, the public will be able to participate in a comment period.

CFTC Chair Michael Selig previously announced that the agency would develop new rules for the industry. On Tuesday, at an event hosted by the Milken Institute, he stated that the measure has been transformed into a “Notice of Proposed Rulemaking” (ANPRM), similar to a preliminary draft issued before the agency officially begins legislative procedures.

Over the past year, trading volume in prediction markets has surged significantly, mainly driven by sports events, although recent contracts related to conflicts with Iran and broader Middle East tensions have drawn sharp scrutiny from multiple Washington stakeholders.

Previously, independent agencies like the SEC and CFTC were not required to submit new rules for White House review, but the Trump administration announced in 2025 that all executive branch agencies, including US financial regulators, should do so.