The U.S. Commodity Futures Trading Commission (CFTC) has sued New Mexico Governor Michelle Lujan Grisham, Attorney General Raúl Torrez and other state officials in the U.S. District Court for New Mexico, seeking to stop the state from applying its gambling regulations to prediction market platforms. New Mexico previously filed suit against Kalshi, alleging the platform offered sports betting to state residents without proper authorization and allowed participation by users below the state's legal gambling age of 21. The attorney general's office has argued that lawful gambling in New Mexico may operate only through tribal-state gaming compacts or within a tightly regulated state framework. The CFTC says Kalshi and similar venues offer federally regulated derivatives contracts, not gambling products governed by state law. CFTC Chair Michael Selig said New Mexico is attempting to apply state gambling statutes to federal derivatives exchanges that fall under the CFTC's exclusive jurisdiction. In recent months, the CFTC has brought similar actions against Wisconsin, Illinois, Arizona, Connecticut and New York to assert oversight of sports prediction markets. The agency also released proposed rules this week that would broadly allow sports-related contracts, underscoring a widening federal-state clash over where prediction markets end and sports betting begins.

White House official Patrick Witt said the administration is aiming to secure passage of the crypto-focused "Clarity Act" by July 4.

White House Executive Director Patrick Witt said he is optimistic the Clarity Act can be passed by July 4. Witt added that significant work is underway "behind the scenes."

SEC Commissioner Hester Peirce delivered her farewell remarks Tuesday at the U.S. Chamber of Commerce Capital Markets Summit in Washington, D.C., closing out a career that made her one of the agency's most prominent advocates for clearer oversight of the crypto sector. In a speech titled "Peirce Out," she confirmed she is leaving after nearly 30 years in Washington, saying she is "moving to the beach." Bloomberg reported she will join Regent University School of Law in Virginia Beach as an associate professor in November. Peirce's second term as commissioner expired in June 2025, and she has remained in office as a holdover since then. Crypto featured as one part of a broader message. Peirce reviewed a wide range of securities-policy issues, including climate disclosure rules, the Foreign Corrupt Practices Act, and the SEC's use of disgorgement. She highlighted digital-asset policy as an example of the Commission returning to its statutory mandate, describing the past year and a half as an effort "to tie our crypto regulatory and enforcement activities to the statutes we administer." Her framing underscored a long-running split with the approach taken under former Chair Gary Gensler, when she repeatedly objected to what she characterized as regulation driven by litigation rather than rulemaking. After Gensler's departure, the SEC reset its digital-asset enforcement and rulemaking under Chair Paul Atkins through an initiative called Project Crypto. Peirce has criticized the SEC's enforcement-first posture for years, calling it a "paternalistic and lazy" way to regulate and likening the regulatory environment for compliant firms to a "regulatory version of an escape room" with no clear exit. Beyond crypto, Peirce used the speech to outline what she views as unfinished business. She raised constitutional concerns about the SEC's pay-to-play rule for investment advisers, arguing it effectively creates a financial disincentive for political speech. She also criticized the agency's expansive interpretation of internal accounting controls under the Foreign Corrupt Practices Act, calling it a "lever" used to discipline companies over controls unrelated to accounting. She also took aim at the Consolidated Audit Trail, describing it as "a massive market surveillance monitoring operation." The SEC issued a concept release in April seeking feedback on the CAT's civil-liberties and privacy implications, an approach Peirce endorsed. Peirce pointed to several recent actions as signs of progress: the May rescission of the rule that barred settling defendants from publicly denying allegations, the proposed rollback of climate disclosure rules, and April's move to reduce the Form PF reporting burden on private funds. She closed by urging bipartisan cooperation on what she called the "boring basics," including updating transfer agent rules, modernizing investor disclosure technology, and reforming investment-company proxy processes. "We will not agree on every detail," she said, "but the joint work of getting to a good place might build good will that can be applied to areas of deeper disagreement." Her departure would leave the SEC with two commissioners. While the agency can legally operate with fewer than three, a two-member commission has no modern precedent and could hinder rulemaking and enforcement when tie votes result in no decision. The Defiant has recently covered Peirce's work on tokenization, including efforts to clarify distinctions between tokenized securities and synthetic instruments, as well as guidance on the proposed innovation exemption for on-chain stock trading. Those positions remain in effect until her seat is filled. Peirce joined the SEC in 2018, filling the vacancy left by Commissioner Daniel Gallagher. She was renominated by President Trump and confirmed to a second term in 2020, and she is the last Republican holdover commissioner.

Sam Bankman-Fried failed to overturn his 2023 fraud conviction and 25-year prison term after the U.S. Court of Appeals for the Second Circuit unanimously affirmed the verdict on Friday. In an opinion authored by Circuit Judge Barrington Parker, a three-judge panel said prosecutors presented "robust" evidence supporting the jury's findings. The court upheld convictions stemming from the collapse of FTX, where prosecutors said customer assets were funneled to Alameda Research—the trading firm Bankman-Fried founded—and then spent on personal expenses, political donations, investments, and real estate. Manhattan federal prosecutors portrayed the conduct at trial as a "fraud of epic proportions." A jury in 2023 convicted Bankman-Fried on seven counts, including fraud and conspiracy, after prosecutors alleged roughly $8 billion in customer funds was misappropriated. Bankman-Fried acknowledged management failures at trial but denied stealing customer assets and pleaded not guilty. On appeal, defense lawyers argued U.S. District Judge Lewis Kaplan improperly restricted evidence that could have supported the claim FTX was still capable of meeting customer withdrawals—a point they said undercut fraudulent intent. The appeals court rejected that argument, citing precedent that fraud is established when money or property is obtained through deception, even if there is later intent to repay. The panel said customers were defrauded once their funds were transferred to Alameda, regardless of any later belief the money could be returned. Bankman-Fried had also sought a new trial under Rule 33 based on purportedly new evidence and testimony, but withdrew the motion before it was formally denied in April. Kaplan said the witnesses cited were not newly discovered and could have been presented at the original trial. Prosecutors also challenged defense assertions that FTX was solvent before its collapse, saying the exchange held only 105 Bitcoin against customer claims approaching 100,000 Bitcoin. Despite the loss on appeal, Bankman-Fried continues to seek clemency. Records show he filed an application with the Justice Department's Office of the Pardon Attorney requesting a "pardon after completion of sentence." President Trump previously told The New York Times he had no plans to pardon Bankman-Fried, and a White House spokesperson reiterated that position when asked about the filing. Public support for clemency has been limited; Senator Cynthia Lummis told Politico she hopes no pardon is granted given the harm to customers. Now 34, Bankman-Fried is serving his sentence at a low-security federal prison near Santa Barbara and, according to Bureau of Prisons records, is eligible for release in 2044. His attorneys did not respond to requests for comment on Friday's decision. Remaining options include seeking en banc review by the full Second Circuit or petitioning the U.S. Supreme Court. For the crypto sector, the decision underscores the legal exposure executives face when customer funds are commingled with proprietary trading and keeps the FTX case central to debates over transparency, custody practices, and regulatory oversight.

Sam Bankman-Fried will remain in federal custody under the 25-year prison term imposed after the collapse of crypto exchange FTX, after a US appeals court declined to overturn his conviction. A unanimous three-judge panel of the US Court of Appeals for the Second Circuit rejected his appeal, calling the government's case "conservatively stated" and "robust," Reuters reported. The ruling leaves intact the 2024 sentence tied to fraud and conspiracy charges stemming from FTX's multibillion-dollar failure. In written remarks cited in coverage, Judge Barrington Parker highlighted the gap between Bankman-Fried's public assurances and the conduct alleged at trial. The opinion said that while he told customers, investors and regulators that client funds were safe, he used FTX as "his own personal piggy bank," including spending customer money on real estate, political contributions and investments. The setback on appeal does not end his bid for relief. Bankman-Fried is also pursuing clemency through the presidential pardon process. Cointelegraph previously reported that a formal pardon request was submitted and appeared in early June on the US Department of Justice Office of the Pardon Attorney website. Bankman-Fried told Fox Business he is "absolutely" seeking a pardon. Public comments suggest the path may be steep. Reporting referenced in the article said President Donald Trump told The New York Times in January that he had no plans to pardon Bankman-Fried. A White House spokesperson declined to comment on the request, while Bloomberg pointed back to Trump's earlier remarks after the application became public. Trump has issued high-profile pardons, including for Ross Ulbricht, founder of the darknet marketplace Silk Road. Ulbricht had been serving two life sentences plus 40 years before receiving a pardon in January 2025. The comparison is frequently raised in discussions of political feasibility, though the two cases carry different narratives and political dynamics. For the broader crypto legal landscape, the Second Circuit decision reinforces that major exchange failures and related conduct can be treated as criminal matters capable of withstanding appellate review. With the conviction affirmed, additional relief through the courts appears limited, shifting attention toward the discretionary clemency track and any signals about the president's stance as the DOJ pardon process continues.

A Tennessee man has been indicted in connection with an alleged cryptocurrency Ponzi scheme that prosecutors say siphoned millions of dollars from investors.

Japan's lower house approved legislation on Thursday that would reclassify cryptocurrencies as financial instruments under the Financial Instruments and Exchange Act. The proposal would shift crypto regulation out of the Payment Services Act and into the same framework used for stocks, bonds, and investment trusts. The measure has not become law. It now moves to the upper house, where passage is broadly expected. If enacted, the new framework could enable regulated spot crypto ETFs. Representatives tied to the Tokyo Stock Exchange have indicated that crypto ETFs could begin listing as early as 2027 once the rule set is finalized. On taxation, Japan's 2026 Tax Reform Outline would move crypto gains to a flat 20% rate starting in 2028, replacing the current progressive "miscellaneous income" treatment that can climb to 55%. Why it matters: A clearer securities rulebook could expand regulated access and support greater institutional participation if the reform is enacted. Market sentiment: Cautiously bullish, policy-driven. The lower house vote signals momentum toward a securities-style regime, even as final approval remains pending. Historical reference: The EU Council adopted MiCA in May 2023, placing cryptoasset issuers and service providers under a unified EU framework. Legal clarity improved, but investor focus shifted toward licensing requirements and compliance costs (Consilium). Japan's proposal differs in that it is still pending and pairs regulatory changes with a separate tax shift and an ETF pathway. Ripple effects: If the upper house passes the bill, brokers and exchanges may begin aligning product roadmaps to the new regime. Tax treatment closer to traditional assets could also make crypto exposure easier for local investors to assess. Opportunities and risks: Opportunities: A scheduled or successful upper house vote could be read as an adoption signal for Japan-regulated crypto access. If final rules spell out ETF listing mechanics, activity among domestic securities firms may become the clearest indicator of market participation. Risks: Any delay in the upper house would increase timing uncertainty, making it prudent to wait for final legal text. Stricter disclosure requirements or tougher penalties for unregistered business activity could raise compliance burdens, potentially pushing back product launches.

Japan's lower house approved legislation on Thursday that would treat cryptocurrencies as financial instruments under the country's securities regime, a shift that could pave the way for regulated spot ETFs and a uniform 20% capital gains tax. The bill amends the Financial Instruments and Exchange Act (FIEA), moving crypto oversight from the Payment Services Act into the same legal framework used for stocks, bonds, and investment trusts, Bloomberg reported. It now goes to the upper house, where approval is broadly expected. The changes are not yet in force. Under the current system, digital assets are largely handled as payment instruments, with lighter disclosure and investor-protection requirements than traditional securities. If brought under the FIEA, crypto issuers and related parties would be subject to securities-style disclosure obligations, custody standards, and insider trading rules comparable to those applied to listed equities. Tokyo Stock Exchange representatives have said crypto ETFs could begin listing as early as 2027 once the framework is finalized. Large securities firms are already preparing: SBI Securities and Rakuten Securities have stated they intend to offer crypto investment trusts after rules are finalized, while 11 other firms—including Nomura, Daiwa, and Mizuho—have indicated they may enter the market. “We aim to foster more innovation by creating a sound trading environment,” Masato Yoshizawa of Japan's Financial Services Agency told Bloomberg. Koichi Kano, Japan head at Singapore-based crypto market maker QCP Group, said the bill offers “long-awaited clarity for market participants.” Tax, disclosure, and enforcement measures are also central to the proposal. Japan's 2026 Tax Reform Outline calls for crypto gains to be taxed at a flat 20%, replacing a progressive miscellaneous-income system that can reach 55%. That tax change is expected to take effect in 2028. Aligning the rate with equities and bonds would address a long-cited structural disadvantage for institutional adoption. Exchanges would face expanded disclosure requirements across 105 tokens currently approved for domestic trading. Penalties would rise for operating an unregistered crypto business: the maximum prison term for unregistered sellers would increase from three years to 10 years. The bill would also extend insider trading enforcement to crypto for the first time. Parties with access to material nonpublic information—including issuers, exchange operators, and those aware of pending listings, delistings, or major technical incidents—would face restrictions similar to those governing public equities. Hinza Asif, president of the Asia Web3 Alliance, told Bloomberg stronger enforcement “could help create a more trusted environment” for new entrants. Industry feedback has been mixed. In FSA working group discussions, some representatives cautioned that compliance demands could be too onerous, noting roughly 90% of domestic exchanges are operating at a loss. Some committee members called the proposals “too heavy-handed” and urged regulators to balance investor protection with market viability. Stablecoins are excluded from the FIEA reclassification and will remain regulated under the Payment Services Act as electronic payment instruments. The carveout reflects Japan's parallel approach to stablecoin infrastructure. Earlier this week, MUFG, SMBC, and Mizuho announced plans for joint stablecoin transactions aimed at live deployment in fiscal 2026. Implementation is expected within about one year after the bill becomes law, pointing to fiscal 2027 for the new FIEA-based crypto regime. The 20% tax rate would follow separately under the 2026 Tax Reform Outline and begin in 2028. When Japan's cabinet approved the measure in April, Finance Minister Satsuki Katayama described it as a step to expand the supply of growth capital while ensuring market fairness, transparency, and investor protection. The upper house has not yet scheduled a vote.