DEX in the City: How Kalshi’s Rough Week Became a Federal Fight for Prediction Markets

Prediction markets face significant regulatory friction as the CFTC invokes rare emergency powers to intervene in a jurisdictional dispute between Kalshi and the state of Michigan. This escalation highlights a broader conflict over federal preemption in the regulation of event-based contracts. Meanwhile, Japan’s recent passage of the Financial Instruments and Exchange Act marks a major shift in crypto policy, transitioning digital assets toward a regulated financial instrument framework with a flat 20% tax rate to encourage institutional participation. Concurrently, the DTCC’s successful processing of live tokenized securities signals a pivotal transition for the industry, moving from experimental, offshore wrappers to the integration of traditional financial infrastructure onto blockchain rails. These developments collectively underscore a global trend toward integrating crypto assets into established regulatory regimes rather than treating them as isolated, speculative entities.