While Senate Democrats wage war against President Trump‘s crypto conflicts of interest, something else is brewing behind the GENIUS Act. The stablecoin regulation bill that passed the Senate 68-30 last week isn’t just about digital dollars; it’s poised to reshape America’s prediction market landscape in ways nobody’s talking about.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) provides a regulatory framework that could affect the landscape of prediction markets in the U.S. It could impact whether Americans get to use crypto to trade on everything from election outcomes to Federal Reserve decisions, through federally regulated platforms like Kalshi, or whether expanded event futures trading will be pushed to offshore sites.
“We thought it would be easiest to start with stablecoins,” Sen. Cynthia Lummis, R-Wyo. said at this year’s Bitcoin 2025 conference in Las Vegas.
“It has been extremely difficult. I had no idea how hard this was going to be,” she said.
At the same event, Sen. Bill Hagerty, R-Tenn., said of the 18 Senate Democrats who eventually broke ranks to support the GENIUS Act: “It has been murder to get them there.”
The stablecoin-betting connection
Here’s what the political theater is obscuring: Prediction markets run on stablecoins. From Polymarket‘s USDC-fueled election betting to smaller platforms processing millions in political wagers, these digital dollars are the rails that make online prediction markets possible.
The GENIUS Act would impose new rules on stablecoin issuers, including reserve requirements, regular audits, and a crucial $10 billion threshold that triggers federal oversight. Cross that line, and the Office of the Comptroller of the Currency gets to scrutinize every aspect of your business.
For prediction markets, this matters more than the Trump family’s USD1 token that has Democrats up in arms. Polymarket, the crypto-based platform that processed $3.7 billion in election bets during the 2024 cycle, remains banned from serving U.S. customers following a 2022 settlement with the Commodity Futures Trading Commission. But clearer stablecoin rules could pave the way for compliant platforms to bring that action back home.
Meanwhile, crypto investors remain bullish on the future of prediction markets and particularly, the Kalshi and Polymarket platforms. A new round of funding this week saw millions more invested in both companies, with investors including high-profile cryptocurrency investing firms.
The lone wolf problem
The regulatory dynamics get even stranger when you consider who’s left to oversee this. Brian Quintenz, Trump’s nominee to chair the CFTC, is about to become the lone commissioner standing after a mass exodus from the agency. Four commissioners are heading for the exits, leaving Quintenz to potentially run the show solo.
According to his financial disclosures, Quintenz previously served as a board director at KalshiEx, a prediction market platform that was recently involved in litigation with the CFTC.
This creates a bizarre conflict of interest problem. Quintenz has committed to recuse himself from matters related to Andreessen Horowitz (a16z) for two years and from matters related to Kalshi for one year, according to an ethics statement. I will not participate personally and substantially in any particular matter involving specific parties in which I know KalshiEx is a party or represents a party, unless I am first authorized to participate…”
But if he’s the only commissioner, who makes the decisions?
“Even if you recuse yourself there will remain a potential appearance of a conflict,” Democratic Senator Amy Klobuchar told Reuters.
Those responsibilities could grow dramatically if Congress passes the Digital Asset Market Clarity Act, which would hand the CFTC authority over most crypto businesses for the first time. Prediction markets would be squarely in the crosshairs.
Beyond crypto: The mainstream play
But here’s where it gets interesting for traditional players. The GENIUS Act’s regulatory clarity could encourage mainstream financial institutions to dip their toes into prediction markets using compliant stablecoins.
Consider Kalshi, the CFTC-regulated platform that offers prediction markets on everything from Congressional control to the weather and even sports. The company has been lobbying for clearer stablecoin rules that would make it easier for corporate treasurers to participate without compliance headaches.
The implications extend beyond betting. Prediction markets have proven to be an important new asset class, serving useful functions as hedging and forecasting tools. Corporate America increasingly views them as essential intelligence and finance tools, if they can access them through regulated channels.
Trump’s stablecoin sideshow
Meanwhile, the political circus continues around Trump’s crypto ventures. World Liberty Financial, a Trump family business, launched its USD1 stablecoin in March, just as Congress was considering the legislation. Democrats seized on the timing, arguing the bill would rubber-stamp presidential corruption.
While stablecoin analysts emphasize that the GENIUS Act’s reserve‑and‑audit rules mirror industry best practices, citing its passage by the Senate and the emphasis on high‑quality liquid‑asset backing, the legislation is expected to affect non‑compliant issuers more than those already following market standards.
“It’s going to raise the quality bar in the marketplace, and it’s going to make it much easier for people to benchmark what a reasonable value proposition looks like,” Paul Brody, Global Blockchain Leader for Ernst & Young shared with CFO Dive.
By contrast, observers say that Trump’s digital‑brand venture is likely generating far more revenue from memecoins and NFTs. The Guardian reports ‘significant revenue, potentially billions’ from those memecoins, while the Washington Post details around $312 million in initial sales and $41 million in fees related to the $TRUMP token launch.
The House’s dilemma
Now the action shifts to the House, where Financial Services Committee Chairman French Hill faces a tough choice. Trump wants a “clean” passage with no changes, but Hill has identified “some differences, some subtle, some material” between the Senate’s GENIUS Act and the House’s competing STABLE Act.
Those differences matter for prediction markets. The bills take different approaches to federal versus state oversight, international enforcement, and the separation of banking and commerce. Each could affect how prediction market platforms structure their operations.
Hill has three options:
- Pass GENIUS as-is
- Negotiate changes and send it back to the Senate, or
- Combine it with the broader Digital Asset Market Clarity Act
The latter approach has been openly discussed but could further complicate passage.
The August deadline
While Trump has publicly pressed for both bills to reach his desk by August, questions were raised at the senate hearing regarding the fact that the administration has yet to nominate enough commissioners to the Commodity Futures Trading Commission, leaving it in limbo with just one or no commissioners in the near term.
At Brian Quintenz’s June confirmation hearing, he declined to say whether he would urge the White House to fill the remaining seats.
The real stakes for prediction markets
The GENIUS Act represents the first major piece of crypto legislation with bipartisan support. Get it wrong, and the U.S. risks falling further behind in digital asset innovation.
For prediction markets, the stakes are particularly high. These platforms have proven their value as information aggregation tools, but regulatory uncertainty has pushed much of the activity offshore. Clear stablecoin rules could be the key to bringing it back.
As Congress heads into the summer recess, the GENIUS Act’s fate hangs in the balance. Americans and international traders can bet on the outcome.
On Kalshi, markets give a roughly 65% chance that stablecoin legislation passes before August 1, with odds rising to 82% before October 1, with over $52,000 trading volume. On Polymarket, traders currently give the bill around a 91% chance of passing by year-end, based on over $215,000 in volume.
