Crypto Market Update: CFTC Claims Exclusive Jurisdiction Over Prediction Markets

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Today's crypto news to know

Read on for a round-up of the biggest crypto market news:

• CFTC claims exclusive federal jurisdiction over prediction markets
• French lawmakers advance stablecoin, exit taxes before budget collapse
• XRP Ledger fixes exploit that allowed unlimited token minting

CFTC claims exclusive federal jurisdiction over prediction markets

The Commodity Futures Trading Commission (CFTC) has issued two distinct measures to formally define prediction market event contracts as federal swaps, while specifically excluding traditional gambling.

On October 9, the agency opened a proposed rule for public comment that expands the federal "swap" definition to encompass event contracts tied to sports, politics, culture and weather.

CFTC Chair Michael Selig clarified this authority, stating, "These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction."

Conversely, an interim final rule took immediate effect to codify the agency's view that casino-style gambling products and sportsbook wagers do not qualify as swaps.

"Casino-style gambling products are not derivatives," Selig further clarified.

Both measures carry 30 day public comment windows and formalize proposals the agency sent to the White House last month. State regulators recently filed multiple lawsuits accusing prediction markets of operating illegal gambling rings, prompting the CFTC to countersue and aggressively defend its exclusive federal oversight.

French lawmakers advance stablecoin, exit taxes before budget collapse

France's National Assembly Finance Committee advanced two major cryptocurrency tax amendments before unexpectedly rejecting the broader budget framework last week.

The committee initially approved a measure to tax crypto holders who swap their digital assets for stablecoins tied to official fiat currencies. The amendment targets electronic money tokens defined under the EU's MiCA regulations and designates these stablecoin swaps as taxable sales starting January 1, 2027. Lawmakers plan to apply France's existing 31.4 percent flat tax to these transactions rather than inventing a new tax bracket.

A second approved amendment expands France's exit tax to cover wealthy digital asset holders relocating their tax residence abroad. The new exit tax applies to households holding over 800,000 euros in combined crypto assets who resided in France for at least six of the previous 10 years. Impacted taxpayers must submit a comprehensive statement detailing all crypto held across foreign accounts and self-custody wallets on the date they move. The committee also passed a third amendment allowing investors to carry crypto losses forward for 10 years to offset future tax obligations.

However, because the committee ultimately rejected the budget's overall revenue section, lawmakers must reintroduce all three cryptocurrency amendments during the upcoming Tuesday (October 13) floor debate.

XRP Ledger fixes exploit that allowed unlimited token minting

XRP Ledger developers neutralized a critical software bug that sat dormant for a decade and held the potential to mint trillions of unauthorized tokens. Security firm Veria Labs discovered the vulnerability and demonstrated how a single transaction could fraudulently create 18.45 trillion spendable XRP tokens.

The flaw existed within the ledger's payment engine and specifically compromised how the network calculated transactions passing through its order books. Whenever a payment consumed multiple active offers, the engine tallied the owed amounts using a 64 bit integer that failed to recognize when the combined total exceeded its maximum limit. The calculation then wrapped around to a much smaller number instead of rejecting the excessively large sum.

The flawed engine then credited the respective offer owners with their full token amounts while charging the buyer the smaller, wrapped total. The system registered the mathematical difference between those two numbers as newly minted XRP tokens. An artificial intelligence security agent built by Veria Labs connected these weaknesses and generated a working local exploit, earning the firm a US$250,000 bug bounty.

RippleX engineers verified the threat and rushed an emergency software patch to network validators on September 25.