Is Washington About To Kill Crypto Prediction Markets For Good? — Why Congress Suddenly Cares

Two different acts banning congressional staff, members of congress and federal officials from trading on prediction markets were introduced on Wednesday, March 25, one of them being effective immediately.

Massachusetts Bans Crypto Prediction Market

Washington’s battle against prediction markets rages on. Following a bipartisan Senate bill introduced on Monday that targets sports‑style bets on platforms like Polymarket and Kalshi, democratic representative Seth Moulton of Massachusetts (MA-06) formally banned all of his staff from “participating in prediction markets”, such as the aforementioned, “to trade or hold positions on political, legislative, regulatory, geopolitical outcomes, or any information that is learned in an official capacity”. The press release frames it as the first such explicit office-wide ban in Congress.

Moulton’s rationale is clear: staff are meant to serve constituents, not profit from policy choices and global events. As he views it, prediction markets have become ethically questionable “playgrounds for corrupt insiders”:

On Nebraska’s side, Congressman Adrian Smith (R-NE-03) and Congresswoman Nikki Budzinski (D-IL-13) introduced the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act (PREDICT Act), another bipartisan effort that aims to ban members of Congress, their spouses and children, the president and vice president, and senior appointees from trading on political and policy outcome markets.

Their core argument and statement are very similar to Moulton’s. Recent episodes of little‑known traders making massive profits on contracts tied to war with Iran or the length of government shutdowns have sharpened fears about insider information leaking into these markets. Smith said:

Budzinski added:

Breaking the PREDICT Act would trigger a civil fine equal to 10% of the value of the banned trade, plus a requirement to hand over all profits from it to the U.S. Treasury, the announcement states.

These new episodes come on top of earlier efforts like Rep. Ritchie Torres’s Financial Prediction Markets Public Integrity Act, following the capture of Venezuela’s former dictator Nicolás Maduro, which also targeted insider trading on platforms such as Polymarket.

For on‑chain and offshore prediction markets, a hard ban on US officials could actually de‑risk the space by reducing headline “insider” scandals, but it also raises the odds of stricter KYC and monitoring requirements in the US.

As it becomes increasingly clear that Washington has its attention set on ethically questionable crypto ventures, it is not too far-fetched to think that similar logic could be extended to other high‑beta crypto venues where policy and profit visibly collide (e.g., tokens tightly linked to election or war outcomes). Traders would do well pricing in regulatory overhang alongside usual market risk.

Cover image from Perplexity, BTCUSD chart from Tradingview