Prediction Market War

gm Bankless Nation,
Prediction markets are under attack. While critics are quick to point these out as a sports gambling alternative, they're kind of missing the regulatory point, David writes in today's essay.

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This week, the new CFTC Chairman and friend-of-the-pod Mike Selig made a loud and public jurisdictional claim over prediction markets by the CFTC.

“Prediction Markets aren’t new… the CFTC has regulated these markets for over two decades” 

This has triggered a very loud negative response from across the country. Elizabeth Warren, Chris Christie, Senators and congressional representatives all expressed vitriol at the idea of prediction markets being regulated only at the level of the CFTC. 

“Prediction Markets are rogue cowboys.” - Chris Christie

“Trump’s CFTC is trying to strip states' authority to regulate gambling within their borders and protect Americans from getting ripped off.” - Liz Warren

“Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the “derivative market” of LeBron James rebounds.” - Utah Governor Spencer J. Cox 

“Sports bets account for 90% of the trading volumes on these platforms. Congress never intended for the CFTC to oversee what is effectively nationwide sports betting.” - Illinois Rep Sean Casten

The bulk of the criticism of Mike Selig's jurisdictional claim over prediction markets is that these platforms represent sports gambling platforms more than anything else. 

It’s worth highlighting that this is uniquely a Kalshi problem – Polymarket volume is distributed across a wide set of categories, with politics and elections-related markets still dominant. 

Regardless, the subject matter of prediction markets is not a relevant detail in how these things get regulated. The reason why prediction markets belong under the CFTC is because...

📈 The Asset

• Bitmine added another 45k ETH, pushing its total holdings to 4.37M ETH
• RWAs have surpassed a $15B market cap atop Ethereum
• BlackRock started buying ETH ahead of its staking ETF rollout
• Harvard established an $87M position in BlackRock’s iShares Ethereum Trust (ETHA)

🏛️ The Protocol

• The EF published its 2026 Protocol Priorities Update; relaunched Ethereum Protocol Studies; and introduced the Platform Team
• FOCIL will be a headliner feature in the Hegota fork
• Ethereum’s zkEVM team published zkVM Standards v0

📱 The Apps

• Balancer launched LBPs on its V3 infra
• Rocket Pool rolled out its major Saturn One upgrade, lowering its minimum validator deposit size to 4 ETH
• Etherfi is migrating its infra to Optimism’s OP Mainnet
• Octant kicked off its V2 migration

🤫 The Privacy Stack

• Flashbots introduced Flashnet, a new network anonymity tool for the Ethereum ecosystem
• Privacy Pools added support for Liquity’s BOLD stablecoin
• Nightfall, EY’s privacy L3, was deployed atop Starknet

🐸 The Culture

• Vitalik: “Neutrality is for protocols” “Giving the weak a fighting chance”; and “There is important synergy between FOCIL and AA”;
• Snapshot unveiled Ethereum Future, a community “temperature check” voting campaign centered around Ethereum’s roadmap.
• ETHDenver 2026 kicked off at Denver’s National Western Center

💽 The Tech

• Base is migrating from Optimism’s Superchain in favor of building out its own unified infra stack
• OpenAI, in collaboration with Paradigm, introduced EVMbench, a new benchmark test for how AI agents approach smart contract vulnerabilities

A legal war over prediction markets just went public.

Ryan and David break down the CFTC’s claim of exclusive authority, the backlash from state officials and lawmakers, and why this fight is really about whether markets or politics get to define truth. They explore why AI-powered prediction markets may be crypto’s strongest product-market fit yet, and why that scares regulators.

Plus: Harvard rotates from Bitcoin into Ethereum, Base breaks from Optimism, Zora expands to Solana, the Ethereum Foundation leadership reshuffles, signs of life for the Clarity Act, institutions buying DeFi tokens, Europe’s unrealized-gains wealth tax, autonomous “life” on Ethereum, OpenAI’s EVMbench, and what ETHDenver says about where crypto goes next.

Tune into this week’s Rollup! 👇

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