Daily Observation of Cryptocurrency Policy: U.S. lawmakers propose the "Ban on Betting on One's Own Campaign Act," legislation to block candidates from manipulating prediction market loopholes

Legislative Motivation: Preventing Conflicts of Interest and Risks of Election Manipulation

The prediction market has shown strong sensitivity to public opinion and depth of funding in the important elections of 2024 and 2026, but the accompanying risks of manipulation have also raised high alert in Washington.

In response to the phenomenon where political figures may profit from insider information or deliberately create fluctuations in election situations in the derivatives market, Congressman Don Davis submitted a specific legislative proposal. This bill directly addresses the issue, clearly defining and strictly prohibiting any public office candidates from directly or indirectly participating in the buying and selling of prediction market event contracts linked to their own election outcomes, preventing political campaigns from evolving into speculative tools for candidates to hedge risks or maliciously cash out.

Severe Penalties: Setting a $10,000 Minimum and Triple Net Profit Punishment

To ensure the bill has sufficient deterrent power, the legislative proposal designs a penetrating economic punishment mechanism.

According to the bill's provisions, once a candidate is found to have violated trading prediction market contracts related to themselves, they will face extremely heavy financial penalties:

• Fine Benchmark: The minimum fine for violators is $10,000;

• Excess Accountability: If the net profit from the illegal trading is high, the fine will automatically increase to three times (3x) the net profit of that transaction. The penalties will be strictly enforced according to the principle of "whichever is higher," ensuring that any speculative arbitrage space is completely eliminated.

Institutional Completeness: Crossing the Senate's Old Regulatory Blind Spot, Bringing "Non-Incumbent Candidates" Under Legal Scrutiny

The introduction of this bill is essentially a key repair to the loopholes in the current political ethics and financial regulations in the United States.

Previously, although the U.S. Senate passed an internal resolution in April this year, strictly prohibiting senators and their core staff from trading prediction market contracts, this resolution only pertains to internal disciplinary norms of the Senate, with very limited applicability: it cannot govern House members and completely cannot restrain the large number of challengers, primary participants, and non-incumbent Senate candidates. Don Davis's bill aims to comprehensively lower the regulatory net at the federal legislative level, ensuring that all candidates entering the campaign trail are subject to the same transparent compliance standards.

Prediction Markets Transitioning from "Platform Autonomy" to "Federal Codified Regulation"

Considering the regulatory trends in Washington at the beginning of October, although mainstream platforms like Kalshi and Polymarket have already established self-compliance risk control in their user agreements, actively restricting candidates from trading their own contracts, the autonomy clauses of commercial platforms lack the final punitive effect of federal judiciary. The advancement of the "Ban on Betting on One's Own Campaign Act" indicates that U.S. regulators have officially included event prediction markets under the serious scrutiny of election laws and the intersection of securities and futures regulation. The subsequent implementation of this legislation will further accelerate the transformation of prediction markets from a wild, gray experiment on the blockchain into a mainstream information and financial pricing tool with legal protection.

Data Source: https://bbx.com/ Cryptocurrency Concept Stock Information Database, compiled based on yesterday's announcements from global listed companies and SEC/TSE disclosure documents.