CFTC Officials Ousted Over Prediction Markets; SEC OKs Bitcoin

Senior officials at the Commodity Futures Trading Commission were suspended, put under internal investigation and later removed after raising concerns about prediction‑market firms, according to a recent investigation.

Career staff identified specific risks: they said Crypto.com was not treating small bettors fairly, Polymarket lacked adequate fraud protections, and a Gemini affiliate had not completed the regulatory review required to operate. Sources described alleged business ties between the firms and members of the Trump family.

Staff members who pressed those concerns contend that interventions by acting CFTC chair Caroline Pham and her senior counsel helped the firms obtain approvals or relief. By the end of 2025, two officials who had raised questions were placed on administrative leave and became the subject of internal inquiries. Three other agency employees who enforced crypto rules faced similar personnel actions. Agency officials have not publicly explained the reasons for the personnel moves or the outcomes of the internal investigations.

Separately, the Securities and Exchange Commission granted accelerated approval for Nasdaq to list European‑style, cash‑settled Bitcoin index options on the Philadelphia Stock Exchange. The contracts will track the Nasdaq Bitcoin Index, which represents one‑one‑hundredth of the CME CF Bitcoin Real Time Index and updates with exchange data roughly every 200 milliseconds. The options will trade under the ticker QBTC, have a minimum price increment of $0.01 and a position limit of 24,000 contracts per side, a level the SEC said is about 0.12% of Bitcoin’s outstanding supply.

Cash settlement means holders receive the difference between the index price and the strike price at expiration instead of taking delivery of Bitcoin. The structure removes the need to manage custody of the token and avoids the early assignment risk associated with American‑style options. Regulators said the contracts provide an additional way for traders to take positions on Bitcoin’s price without using spot ETFs or handling physical cryptocurrency.

Investor Lawrence Lepard offered a contrarian view on U.S. monetary policy, predicting newly appointed Federal Reserve chair Kevin Warsh will cut interest rates over the coming year. Lepard cited expected productivity gains from artificial intelligence and easing inflation pressures as reasons he anticipates rate reductions, while many market participants expect rates to hold or rise.

Prediction markets allow users to bet on the outcome of events and have drawn regulatory scrutiny over fraud risks, customer protections and the adequacy of review processes when firms expand services. The CFTC enforces derivatives and certain related markets; career staff carry out investigations and enforcement. Exchanges and broker‑dealers must follow listing standards and position limits intended to limit market disruption, and regulators evaluate market data and surveillance capabilities when approving new derivatives.