Kalshi ruling, Kraken Fed access and Deutsche Börse stake

A U.S. federal judge blocked Arizona from pursuing criminal charges against prediction market Kalshi on grounds that federal derivatives law can preempt state gambling statutes. The Commodity Futures Trading Commission intervened in the case, arguing federal oversight of derivatives limits state authority to treat Kalshi’s contracts as illegal gambling. The court found the platform operates in an area subject to federal derivatives oversight and enjoined the state prosecution.

Kalshi offers event-based contracts that trade like derivatives. The court’s order relied on the principle that when federal law governs a field and conflicts with state law, federal rules take precedence over state criminal enforcement in that field.

The Federal Reserve granted Kraken a master account, giving the cryptocurrency exchange direct access to the central bank’s payment systems and U.S. payment rails rather than routing transactions through correspondent banks. Lawmakers and regulators have raised questions about whether is Kalshi legit and firms with Fed master accounts should face the same anti-money laundering controls and prudential oversight as banks, and whether direct access for nonbank entities could affect the payments system.

Deutsche Börse acquired a $200 million ownership stake in Kraken. The transaction gives the traditional market infrastructure provider a financial interest in a regulated cryptocurrency exchange.

Other regulatory developments occurred at state, federal and international levels. Wisconsin enacted a law capping daily crypto ATM transactions at $1,000, requiring operators to reimburse victims of fraud and mandating consumer warnings and reporting duties for ATM operators. At the federal level, the Securities and Exchange Commission has shifted enforcement focus toward fraud, investor harm and high-impact cases. The U.K. financial regulator opened a consultation on detailed rules for trading platforms, custody and staking, with implementation anticipated by 2027.

Federal preemption is the legal doctrine under which federal law displaces conflicting state law in fields where Congress has legislated. A Federal Reserve master account allows an entity direct participation in the Fed’s payment systems, a capability historically held by banks and certain other regulated institutions.