On February 12 (local time), U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins appeared before the Senate Banking Committee, describing prediction markets as a "huge issue" and stating that this sector is facing intensifying legal scrutiny. This marks the most direct and high-level policy warning from federal financial regulators to the industry, following the explosion in prediction market trading volumes during the 2024 U.S. election cycle.
As a platform dedicated to tracking crypto compliance developments, Gate will provide an in-depth analysis of the policy background behind the SEC’s latest statements, the "dual-jurisdiction" dilemma facing prediction markets, and—using Gate’s latest market data as of February 13, 2026—explore how shifting regulatory expectations are impacting price anchoring logic for major crypto assets.
Key Takeaways from the Hearing
Atkins’ remarks at the hearing revealed a regulatory philosophy sharply different from that of his predecessor, Gensler. He openly acknowledged that prediction markets are "primarily regulated by the CFTC (Commodity Futures Trading Commission)" but emphasized that the SEC and CFTC are holding weekly meetings through the "Project Crypto" initiative to address potential "overlapping jurisdiction" issues.
- "A security is a security": Atkins stressed that regardless of how a product is packaged, if its essence meets the definition of a security, the SEC reserves enforcement authority.
- "We’ll wait and see": When asked whether clear rules for prediction markets would be introduced, Atkins offered no timeline, indicating that regulators remain in an "observation and coordination" phase.
- Coordinated regulation: On the same day, CFTC Chair Michael Selig stated that the agency would ensure "reasonable rules and protections" for prediction markets to prevent business from migrating offshore.
These signals suggest that the current "regulatory anarchy" surrounding prediction markets is coming to an end. However, the specifics of any new framework will depend on ongoing interagency coordination and Congressional action.
Legal Disputes: The Full Picture
If the SEC’s statements represent "top-level design," then the wave of lawsuits being heard in state courts across the country is the real-world survival test for the prediction market industry.
Federal Jurisdiction Claims
Operators like Polymarket and Kalshi cite the Commodity Exchange Act, insisting that event contracts fall exclusively under CFTC oversight, and that states have no right to block them under gambling laws. This week, Polymarket filed a federal lawsuit against Massachusetts, seeking judicial affirmation of the "federal preemption" principle.
State-Level Regulatory Pushback
- Massachusetts: A district court has issued a preliminary injunction against Kalshi, barring it from operating sports-related contracts in the state.
- Nevada: Authorities have halted Polymarket’s operations, citing concerns over the "integrity of the sports betting regulatory system."
- At least eight other states have followed suit, including New York, Illinois, and Ohio.
The core conflict: Congress has never explicitly given the CFTC exclusive authority over event contracts. The legal gray area between traditional gambling and emerging financial derivatives is now the focal point of a drawn-out legal tug-of-war.
Market Fundamentals: Regulatory Uncertainty Fails to Slow Surging Volumes
Despite looming regulatory clouds, user demand and capital inflows into prediction markets continue to accelerate.
- Trading volume: According to Dune, weekly prediction market trading volume reached $37 billion in January 2026, setting a new record.
- Super Bowl effect: Trading on Super Bowl-related contracts is expected to surpass $3.1 billion in 2026, up 39% year-over-year.
- Primary market momentum: Polymarket’s valuation has reached $9 billion, while Kalshi is valued at $11 billion.
A paradox emerges: The more regulatory pressure increases, the more users and capital concentrate on leading prediction platforms—a phenomenon strikingly similar to the "compliance-driven migration" seen in DeFi between 2020 and 2022.
Market Correlations: Can Prediction Markets Become a New Variable in a Macro-Pressured Crypto Landscape?
As of February 13, 2026, Gate’s latest data shows that major crypto assets remain under cautious pressure ahead of key macroeconomic releases.
| Asset | Price (USD) | 24h Change | Key Support | Key Resistance |
|---|---|---|---|---|
| BTC | $66,580.7 | -1.19% | $65,111 | $68,419.7 |
| ETH | $1,947.19 | -0.61% | $1,896.71 | $2,001.62 |
Bitcoin (BTC) Technical Levels
- All-time high: $126,080 (January 2026)
- Annual price forecast: Gate’s market analysis model projects an average BTC price of $66,054.9 for 2026, with an expected range between $62,752.15 and $78,605.33.
- Market sentiment: Despite a 1.19% drop over 24 hours, on-chain data shows long-term holders are not panic selling. The market is awaiting the release of U.S. CPI data.
Ethereum (ETH) Technical Levels
- Key psychological threshold: After losing the $2,000 level, $1,900 has become the short-term battleground between bulls and bears.
- Annual outlook: The 2026 average ETH price forecast is $1,936.98, with a projected low of $1,084.7 and a high of $2,324.37.
- Market share: ETH’s market share remains steady at 9.80%, with sentiment rated as "neutral."
Regulatory Impact on Pricing Logic
It’s important to clarify: The SEC’s comments on prediction markets do not directly target major assets like BTC or ETH. However, the market interprets this as a sign that U.S. federal agencies are taking a tougher stance on crypto derivatives, compounding existing macro tightening expectations.
The core value of prediction markets lies in "price discovery," not "asset issuance." If the SEC ultimately classifies certain event contracts as securities, the most directly affected products will be binary options based on specific events (elections, sports, economic data), not decentralized assets like Bitcoin or Ethereum. The current declines in BTC and ETH are more closely tied to U.S. equities and liquidity expectations than to a linear extrapolation of regulatory fears.
Industry Outlook: Compliance Is the Only Path—Offshoring Is a Dead End
Notably, CFTC Chair Selig has stressed the importance of "not pushing prediction markets offshore." This sends a clear message:
- The U.S. does not want to lose its leadership in innovation: The strong performance of prediction markets during the 2024 election cycle demonstrated their public value.
- Compliance costs will become institutionalized: The likely future model involves a three-tier structure—CFTC-registered entities, SEC securities law compliance, and state-level license exemptions.
- Decentralization is not a regulatory loophole: Even with on-chain settlement, platforms serving U.S. users must comply with federal securities laws.
Advice for traders and project teams:
- Short term: Monitor whether the Project Crypto weekly meetings yield substantive draft regulations.
- Medium term: Track the outcome of Polymarket’s lawsuit against Massachusetts, which will determine whether "federal preemption" has judicial force.
- Long term: Prediction market platforms with compliance readiness will enjoy exponential growth, while offshore, regulation-evading versions will gradually lose liquidity and mainstream users.
Conclusion
At the close of the hearing, Atkins called for "promptly filling the SEC’s Democratic commissioner seats," reminding us that, regardless of how policy evolves, regulatory checks and balances offer far more predictability than a single authority. Prediction markets now stand at a crossroads of legal redefinition, and Gate will continue to provide Chinese-speaking users with the latest policy insights and transparent market data.
Regulation is not the endgame—definition is. When "events" can be priced and risks can be hedged, prediction markets cease to be mere gambling variants and become the next frontier in the evolution of information efficiency.
