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Kalshi Prediction Markets Are Pulling In $1 Billion Monthly as State Regulators Loom

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In brief

  • Kalshi reached $1 billion in monthly volume and now dominates 62% of the global prediction market industry, surpassing Polymarket’s 37% share.
  • Four states including Massachusetts have filed lawsuits claiming Kalshi operates as an unlicensed sportsbook, with Massachusetts seeking to permanently bar the platform.
  • Kalshi operates under federal CFTC regulation as a designated contract market, arguing this preempts state gambling laws that require separate licensing.

Prediction market Kalshi just topped $1 billion in monthly volume as state regulators nip at its heels with lawsuits alleging that it’s an unregistered sports betting platform.

“Despite being limited to only American customers, Kalshi has now risen to dominate the global prediction market industry,” the company said in a press release. “New data scraped from publicly available activity metrics details this rise.”

The publicly available data appears on a Dune Analytics dashboard that’s been tracking prediction market notional volume.

The data show that Kalshi now accounts for roughly 62% of global prediction market volume, Polymarket for 37%, and the rest split between Limitless and Myriad, the prediction market owned by Decrypt parent company Dastan. Trading volume on Kalshi skyrocketed in August, not coincidentally at the start of the NFL season and as the prediction market pushes further into sports.



But regulators in Maryland, Nevada, and New Jersey have all issued cease-and-desist orders, arguing Kalshi’s event contracts amount to unlicensed sports betting. Each case has spilled into federal court, with judges issuing preliminary rulings but no final decisions yet.

Last week, Massachusetts went further, filing a lawsuit that calls Kalshi’s sports contracts “illegal and unsafe sports wagering.”

The 43-page Massachusetts lawsuit seeks to stop the company from allowing state residents on its platform—much the way Coinbase has had to do with its staking offerings in parts of the United States. Massachusetts Attorney General Andrea Campbell contends that there’s no difference between Kalshi’s prediction market and a “sportsbook,” the likes of which are licensed, taxed, and regulated at the state level.

The state also alleges that Kalshi is skirting other rules it would have to follow if it were categorized as a sportsbook. The prediction market currently allows anyone 18 or older to trade on the platform. In Massachusetts, the legal age for online sports betting is 21.

“Kalshi offers its users a fair, transparent, federally-regulated, and nationwide marketplace,” a Kalshi spokesperson told Decrypt. “Rather than engage in dialogue with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas.”

Many well-known sports betting platforms—like FanDuel, DraftKings, and BetMGM—are already registered and pay the state’s 20% tax on gross gaming revenue. Retail sports betting, which means being in-person at a casino, is taxed at a 15% rate.

Kalshi doesn’t currently have a state license in Massachusetts or in any other state. And the lawsuit isn’t an invitation for the company to submit an application. It’s seeking to have Kalshi “permanently” barred.

For now, the company is operating in Massachusetts and across the U.S. on the premise that it’s a federally regulated designated contract market, or DCM, under the Commodities Futures Trading Commission.

The CFTC list of companies with DCM licenses also includes Aristotle, the company behind soon-to-relaunch PredictIt; Railbird, which is rumored to be discussing an acquisition by DraftKings; LedgerX, which was acquired by FTX in 2021 and then sold during its bankruptcy at a massive loss in 2023; and QCX, which was acquired by Polymarket in a $112 million deal earlier this year.

Kalshi and other markets following in its footsteps argue that a federal license to offer events contacts, as regulated by the CFTC under the Commodity Exchange Act, is enough and should, in effect, preempt any state law that would run counter. For now, Kalshi and other prediction markets are pressing forward, and with great success as the prediction space heats up.

But depending on how things go in courtrooms at the state level, a final resolution could be left to the Supreme Court.

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Asia Morning Briefing: BTC Traders Brace for Fed Cuts But Massive $4.5B Liquidity Tests Loom
Crypto Trends

Asia Morning Briefing: BTC Traders Brace for Fed Cuts But Massive $4.5B Liquidity Tests Loom

by admin



Good Morning, Asia. Here's what's making news in the markets:

Welcome to Asia Morning Briefing, a daily summary of top stories during U.S. hours and an overview of market moves and analysis. For a detailed overview of U.S. markets, see CoinDesk's Crypto Daybook Americas.
Polymarket and CME FedWatch are aligned: the Fed’s easing cycle begins tomorrow. Both have a 25 bps cut locked in for the next FOMC meeting, with odds building for a three-cut path through year-end.

Polymarket traders leave more room for aggressive easing, while CME assigns steadier probabilities of 25 bps steps. Either way, markets see 75 bps in cuts as the baseline for 2025.

Market conviction around the Fed pivot is already showing up on-chain, with BTC trading at $116,762, up 1.3% on the day and 4.7% on the week, while ETH sits at $4,502, up 4.3% on the week as traders price in the cuts.

Now, some traders are sitting on the sidelines to see just how the market might react as the Fed announces cuts.

In a recent report, CryptoQuant data shows bitcoin exchange inflows have dropped to a 7-day average of just 25,000 BTC, the lowest in more than a year and a half; the level seen in mid-July when BTC first crossed $120,000. The average BTC deposit size has also halved to 0.57 BTC, evidence that large holders are sitting idle rather than rushing to sell.

ETH is seeing the same pattern: exchange inflows have fallen to a two-month low of 783,000 ETH, down sharply from 1.8 million in August. The average ETH deposit has declined to 30 ETH from 40–45 ETH earlier this summer, suggesting reduced sell-side activity from whales.

If BTC and ETH are being hoarded, stablecoins are flowing in CryptoQuant writes in its report. USDT deposits into exchanges surged to $379 million at the end of August, the highest this year, and remain elevated at $200 million. The average daily USDT deposit has doubled since July, giving exchanges the “dry powder” needed to support a post-Fed rally.

But the flows aren’t uniform. Altcoins are seeing a resurgence of exchange activity, with transaction deposits climbing to a 7-day total of 55,000, up from a flat 20,000–30,000 range earlier this year. That divergence signals possible profit-taking in higher-beta names even as BTC and ETH supply remains tight.

“September brings a wave of token unlocks totaling $4.5 billion, a dynamic that could pressure liquidity and test market absorption,” OKX Singapore CEO Gracie Lin wrote in a note to CoinDesk.

True opportunity lies beyond short-term volatility, Lin argued.

“Stablecoins are nearing $300 billion in supply, token unlocks are putting market depth to the test, and major infrastructure upgrades like Nasdaq’s move toward tokenized securities are signaling that crypto is becoming part of the global financial system, not an outlier,” she wrote.

The message is clear: the Fed pivot is nearly priced in. What matters now is whether crypto’s liquidity buffers, stablecoins, exchange inflows, and token unlocks can absorb the shocks and channel capital into the next leg higher for BTC.

Market Movement

BTC: BTC is trading above $116,500 as traders are optimistic about potential U.S. interest rate cuts. Technical factors such as the closing of futures gaps have added upward pressure. Some caution is setting in ahead of the Fed meeting.

ETH: ETH is trading with modest strength, supported by overall crypto market momentum (dominated by BTC), but with some resistance as investors weigh macro risks and await clarity on policy from the Fed.

Gold: Gold is hitting record highs, driven by expectations that the U.S. Federal Reserve will cut rates, a weakening U.S. dollar, and heightened geopolitical or macroeconomic uncertainty. Safe‑haven demand from investors is strong.

Nikkei 225: Asia-Pacific stocks fell on Wednesday morning, with Japan’s Nikkei 225 down 0.3%, as investors tracked Wall Street losses and awaited a likely Fed rate cut decision.

S&P 500: The S&P 500 slipped 0.13% to 6,606.76 Tuesday as investors booked profits ahead of the Fed’s rate decision after touching a record high earlier.

Elsewhere in Crypto

  • Eric Trump defends UAE-Binance deal, says his father is ‘first guy who hasn’t made money off of the presidency’ (The Block)
  • President Trump Alleges New York Times Harmed Meme Coin in $15 Billion Lawsuit (Decrypt)
  • The Clarity Act Is Probably Dead: Here's What's Next for Its Successor Legislation (CoinDesk)



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Bitcoin Sinks Below $110,000 as Fed Turmoil and Economic Data Loom

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In brief

  • Bitcoin dropped 2.8% to $109,882, with $940 million in long liquidations.
  • Trump’s firing of Fed Governor Lisa Cook rattled markets, briefly sinking the dollar index.
  • Investors await Q2 GDP revisions and core PCE inflation for clues on September rate cuts.

Bitcoin is extending its weekend losses ahead of key macroeconomic events this week that could influence the U.S. Federal Reserve’s September rate cut decision.

Bitcoin slid 2.8% to $109,882 on Tuesday with liquidations, primarily longs, over the past 24 hours topping $940 million, according to CoinGlass data.

“Capital is rotating out of risk, with thin weekend liquidity amplifying swings,” Rachael Lucas, a crypto analyst at BTC Markets, told Decrypt.



The recent drop has pushed Bitcoin below $110,800, or the average cost basis of investors who purchased the top crypto in the past three months.

“Historically, failure to hold above this level has often led to multi-month market weakness and potential deeper corrections,” Glassnode cautioned in a post to X on Tuesday.

The market volatility comes amid U.S. President Donald Trump’s firing of Federal Reserve Governor Lisa Cook.

The resignation letter posted on TruthSocial after the trading day ended cited “deceitful and potentially criminal conduct” over allegations she falsified documents relating to her primary residence.

Investors balked at the news, with the U.S. dollar index shedding 1% before clawing back losses to 98.32. U.S. futures for major indexes also dropped by a quarter of a percent.

“Markets don’t think this move helps American business,” Justin Wolfers, an economics professor at the University of Michigan, posted on X.

“This is dangerous. This move serves Trump, but not America,” Wolfers added. “Our economy is at risk when the President undermines the Fed,” he said.

Eyes are now fixed on this week’s upcoming revised GDP figures for the second quarter on Thursday, with economists expecting the growth rate to be revised slightly higher to 3.1% from the initial 3% estimate.

Meanwhile, year-over-year core PCE inflation, which tracks changes in consumer spending, is forecast to show inflation re-accelerating, from 2.8% to 2.9%, according to MarketWatch data.

A drop in growth and a larger-than-expected rise in inflation, however, could derail next month’s plans by the Fed, including future cuts this year, Decrypt was previously told.

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Jesse Hamilton
NFT Gaming

Head of IRS Crypto Work Exits as U.S. Tax Changes Loom For Digital Assets

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The head of the U.S. Internal Revenue Service’s digital assets unit, Trish Turner, is leaving her post for the private sector just as new tax policies are set to potentially bring in a wave of crypto work for the agency.

As she departs, it’s unclear who will be running the office that’s been leading the tax agency’s crypto work as a major shift in U.S. digital assets taxation is on the horizon. Turner’s exit comes after the IRS set several new rules and forms in motion to direct taxation requirements for individual crypto investors and their brokers. And the departure comes after two other top officials on crypto work, Seth Wilks and Raj Mukherjee, already left through the Trump administration’s budget-slashing campaign earlier this year.

The tax arm of the Treasury Department is poised to experience a massive influx of crypto-sector filings while it’s also weathering deep budget and staffing cuts in excess of 20,000 employees. IRS staffing — long a target of Republican lawmakers — has experienced a long-term decline from about 113,000 three decades ago to about 76,000 at a recent count.

One of the major crypto changes at the IRS was the new 1099-DA form that millions of investors will be receiving from their crypto brokers. About 3 million taxpayers have previously disclosed they had crypto transactions — a number that’s likely much higher in reality, setting up a potential glut of newly disclosed crypto taxpayers as the policies come online. The IRS didn’t respond to questions about Turner’s departure and who will take over.

“Digital assets have shifted from a niche issue to a core focus for global regulators, and I am proud to have helped lay the foundation for oversight in this fast-changing space,” Turner said in a statement to CoinDesk. “Now, I’m excited to be moving to the other side of the table to help taxpayers, businesses, and institutions understand their obligations and navigate those same rules with confidence.”

Among the private-sector roles she’s taking on, Turner will be tax director at the firm CryptoTaxGirl, a tax business that specializes in crypto transactions, and will also do work with the UK firm Asset Reality, she said.

Laura Walter, CTG’s founder, said in a statement that Turner’s arrival will help “ensure our clients receive the highest level of guidance, protection, and confidence in their filings.”

For years, crypto investors and businesses have struggled through U.S. tax uncertainties, with no third-party documentation to make their tax-filing requirements clear. So a large segment of digital assets holders have skipped their crypto tax calculations in past years, further muddying the water for the IRS.

Because the new 1099-DA forms will be flowing from crypto investors’ accounts at such firms as Coinbase and Kraken early next year, those recipients will be under increased pressure to work out and disclose their tax positions. But one IRS rule that sought to treat certain decentralized finance (DeFi) platforms as brokers was overturned by Congress in April, leaving treatment of that corner of the crypto sector on less certain ground.Read More: The Coming Crypto Tax Bomb



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