President Donald Trump defended the cryptocurrency industry and the Commodity Futures Trading Commission’s oversight of prediction markets in a Truth Social post on Tuesday, as regulatory tensions intensify between federal authorities and state governments over jurisdiction and control.
"Where we are currently the Crypto (Bitcoin, etc.) Capital of the World, other Countries are trying diligently to replace us in that capacity, but we won’t let that happen," Trump posted.
The posts followed a major New York Times investigation that claimed the CFTC had supported the expansion of prediction markets at multiple stages while easing oversight of digital assets through staff cuts and the sidelining of senior career officials.
Trump and officials aligned with the CFTC, maintain that prediction markets should be treated as federally regulated financial markets rather than gambling platforms.
However, several governors and state attorneys general across party lines argue that event-based contracts, particularly those linked to sports outcomes, effectively amount to gambling and should fall under state oversight.
Minnesota Governor Tim Walz recently signed a first-of-its-kind law prohibiting prediction market platforms from operating in the state. In response, the Trump administration filed a lawsuit against Minnesota, seeking to reinforce the CFTC’s regulatory authority.
Trump and members of his family have financial connections to both the crypto and prediction market industries at the center of the ongoing regulatory dispute.
His eldest son, Donald Trump Jr., is reportedly associated with Kalshi and Polymarket, two of the largest prediction market platforms. Trump himself has also been linked to World Liberty Financial, a crypto venture that has attracted scrutiny amid his broader support for digital assets.
Meanwhile, Letitia James recently filed lawsuits against Coinbase and Gemini, alleging that their prediction market offerings amounted to unlicensed gambling operations in New York. Both companies argue that they are regulated under federal authorities rather than state jurisdictions.
The outcome of the regulatory battle could determine whether prediction markets are allowed to operate freely across the US or face varying restrictions at the state level.
In his post, Trump specifically targeted Tim Walz and Letitia James, indicating that the White House plans to strongly oppose state-led attempts to restrict the industry.
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At the same time, growing scrutiny around Trump’s personal ties to crypto and prediction market businesses has intensified the broader debate over who should regulate these sectors and who ultimately stands to benefit from their expansion.
Sumit Gupta, Co-Founder at CoinDCX said that the fact that the US is ahead in this space is not a coincidence; it is the result of deliberate policy and by providing regulatory clarity, such as approving spot Bitcoin ETFs, the US unlocked unprecedented institutional participation, amassing ~$100 billion in total net assets.
“Our business houses and family offices have the capital and appetite to participate at scale. But, exactly like US institutions pre-ETF, they are hoping for a definitive signal from the government and regulatory bodies.”
Gupta also said that the US has shown what happens when a government backs an emerging asset class with intent. "We need that same conviction here: local support, clear regulation, tax parity with equities, and a structured framework; now is our time to seize the momentum and Just as the IT industry once did, crypto too can become a defining contributor to India's economy!"
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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