UBS has increased its BlackRock Bitcoin ETF holding to about 2.5 million shares worth nearly $90 million as of June 30, lifting the position’s value by roughly 230% during the first half of 2026.

The U.S. Securities and Exchange Commission filing, submitted by UBS on Aug. 13, disclosed the Swiss bank’s quarter-end position in BlackRock’s iShares Bitcoin Trust (IBIT). UBS reported about 2.5 million shares as of June 30, up from approximately 549,000 shares six months earlier.

Measured by share count, the position expanded by about 355%, with UBS adding nearly 2 million shares during the period. Its reported value increased from roughly $27 million at the end of 2025 to close to $90 million, a gain of about 230%.

The difference between the two rates partly comes from IBIT’s market performance. BlackRock’s fund data show its market-price return fell 32.95% during the six months through June 30, meaning the increase in the value reported by UBS came from additional shares rather than a rise in IBIT’s price.

What the UBS Bitcoin ETF filing shows

Form 13F requires institutional investment managers exercising discretion over at least $100 million in certain securities to report their holdings to the SEC every quarter. The reports cover positions held at the end of the period, which means UBS could have changed its IBIT exposure between June 30 and the Aug. 13 filing date.

A 13F also does not provide enough information to determine whether every reported share belongs to UBS itself. The filing combines securities managed under the institution’s investment discretion and may include positions held in client, advisory, wealth-management, or asset-management accounts.

As a result, the disclosure should not be treated automatically as a direct $90 million purchase made with the bank’s corporate capital. It confirms that UBS reported control over the IBIT shares for filing purposes, but it does not identify the beneficial owners or explain the investment instructions behind the position.

Even at nearly $90 million, the holding remains small beside the money UBS manages. In its second-quarter results published July 29, the bank reported a record $7.3 trillion in group invested assets, including $36 billion in net new assets at its Global Wealth Management division during the quarter and $73 billion during the first half.

UBS also reported $2.8 billion in net profit for the second quarter and $5.8 billion for the first six months of 2026. Against those figures, the IBIT position represents a limited allocation rather than evidence that Bitcoin has become a major part of the bank’s investment operations.

UBS has expanded regulated crypto access

While the filing does not reveal who directed the IBIT purchases, UBS has continued developing digital-asset services for wealthy customers. In January, crypto.news covered the bank’s plan to give select high-net-worth and ultra-high-net-worth private banking clients access to cryptocurrency investments.

The reported plan followed earlier limits around the bank’s handling of U.S. spot Bitcoin ETFs. UBS had allowed certain wealth-management clients with brokerage accounts to buy the products after their U.S. approval, while applying eligibility and risk controls to access.

Using an exchange-traded product allows the bank and eligible clients to obtain Bitcoin-linked exposure through conventional securities infrastructure. BlackRock states that IBIT seeks to follow Bitcoin’s price while reducing the operational and custody work involved in holding the cryptocurrency directly.

IBIT trades on Nasdaq and charges a 0.25% sponsor fee. Unlike a conventional mutual fund or most ETFs, however, BlackRock says the trust is not registered as an investment company under the Investment Company Act of 1940 and therefore does not receive all the regulatory protections that apply to products registered under the law.

Although investors buy and sell IBIT shares through brokerage accounts, the trust holds Bitcoin as its single underlying asset. BlackRock reported that the fund had about $47.34 billion in net assets and 1.32 billion shares outstanding as of Aug. 12.

UBS’s reported 2.5 million shares would therefore account for about 0.19% of IBIT’s latest outstanding share count. The stake is too small to give UBS control over the fund, while the filing provides no evidence that the bank intends to become a direct Bitcoin custodian.

U.S. Bitcoin ETF access has grown

For American investors, the UBS filing shows how a foreign financial institution can gain exposure to Bitcoin through a security listed and traded in the United States. The SEC approved U.S. spot Bitcoin exchange-traded products in January 2024, creating a route for banks, asset managers, advisers, and brokerage customers to use familiar market infrastructure.

Institutional approaches to the products have varied. A July filing showed that Wells Fargo trimmed its IBIT stake while adding to some other Bitcoin funds and increasing its exposure to Ethereum and Solana investment products. The bank also opened an IBIT call position and increased its put exposure, showing that institutions can use the fund for hedging and trading as well as long-only Bitcoin exposure.

Regulated derivatives around IBIT have also expanded. In July, the SEC allowed NYSE Arca to quadruple its options limit from 250,000 to 1 million contracts after the exchange said trading activity justified a higher ceiling.

NYSE Arca told the regulator that the change would help large participants manage inventory and hedge positions without dividing trades because of exchange limits. The SEC allowed the proposal to take effect immediately while continuing to accept public comments.

Such options can help professional investors manage risk around IBIT, but BlackRock warns that the trust’s value can rise or fall with Bitcoin and that investors may lose principal. Fund data show IBIT returned negative 32.97% on a net asset value basis during the first half of 2026 and negative 45.62% over the 12 months through June 30.

IBIT remains the dominant U.S. Bitcoin fund

Despite its weak first-half performance, IBIT has continued to control a large part of the U.S. spot Bitcoin ETF market. BlackRock’s fund attracted $183.4 million on July 30, accounting for 78.7% of the $233.1 million entering the U.S. products that day.

At the time, IBIT held $47.67 billion in net assets, while the full group of U.S. spot Bitcoin ETFs held about $78.76 billion, according to data cited in July ETF coverage. The July 30 inflow was the fund’s largest since July 6, when it received $209.4 million.

The daily recovery followed an uneven period for Bitcoin investment products. Farside Investors’ figures showed approximately $438.2 million in net inflows from July 1 through July 30 after the funds lost about $2.41 billion in May and $4.51 billion in June.

BlackRock reported an IBIT net asset value of $35.85 and net assets of $47.34 billion as of Aug. 12. The fund also listed a 52-week net asset value range of $33.19 to $71.32 and a 30-day average trading volume of about 35.7 million shares.

UBS must disclose its next quarter-end U.S. securities positions in a later 13F filing, which will show whether the reported IBIT share count was increased, maintained, or reduced as of Sept. 30.

Tether has completed what it describes as its first comprehensive independent audit of its annual financial statements, with KPMG US issuing a clean opinion for its 2025 accounts. The audit, covering the year ended Dec. 31, 2025, extends beyond Tether’s routine reserve attestations by examining the company’s broader financial reporting and the evidence behind it.

According to Tether, the audited statements show reserves exceeding liabilities by $6.814 billion. The company said the engagement tested the balance sheet, income statement and cash flow statements, including the assets backing issued tokens and the liabilities those tokens represent.

Key takeaways

• KPMG US issued an unqualified (clean) opinion on Tether’s 2025 annual financial statements under US accounting standards.
• The audit examined Tether’s full set of annual statements—including systems, transactions, valuations, counterparties, and ownership records—rather than only reserve attestations.
• Tether reported that audited reserves were greater than liabilities by $6.814 billion as of Dec. 31, 2025.
• KPMG physically inspected Tether’s gold holdings, including counting each bar rather than relying only on custodian documentation.
• The result arrives as Tether continues to expand its wider tokenization footprint alongside USDT’s dominance in the stablecoin market.

What makes this audit different from Tether’s usual attestations

For years, Tether has published quarterly reserve attestations that focus on whether the assets backing its stablecoins meet stated coverage levels. This new step moves the verification closer to a traditional financial statement audit—subjecting not just reserve balances but the company’s broader accounting and underlying documentation to independent scrutiny.

Tether said the audit covered its balance sheet, income statement and cash flows for the period ended Dec. 31, 2025, and included review of the transactions and systems used to produce the statements. The audit also involved evaluation of ownership records, valuations, counterparties and related evidence—areas that typically go beyond what reserve attestations concentrate on.

In another key procedural detail, Tether said KPMG physically inspected and counted its gold holdings, verifying each gold bar rather than relying solely on custodian records. That kind of direct verification can be particularly relevant for investors focused on commodity-backed products and the reliability of custody arrangements.

The clean opinion and what Tether says the numbers show

Tether reported that KPMG issued an unqualified opinion, stating that the audited statements fairly present the company’s financial position, results and cash flows in all material respects under US accounting standards. That phrasing is commonly used to indicate there were no material departures from required accounting frameworks as presented in the report.

On the headline coverage metric, Tether said the audited statements reflect reserves exceeding liabilities by $6.814 billion. While investors will likely treat this figure as a high-level indicator rather than a complete picture of risk, it is the central quantitative conclusion tied directly to the audit outcome.

For readers trying to interpret the importance of a clean audit, the practical takeaway is that it reduces one category of uncertainty: whether the reported annual financial statements—covering income and cash flows as well as reserves—were prepared in accordance with the framework and supported by examined evidence.

Tether’s expanding footprint beyond USDT

USDT remains at the center of Tether’s business. The stablecoin’s market capitalization is reported at roughly $183 billion, representing about 61% of the approximately $301 billion stablecoin market, according to DefiLlama. That puts USDT well ahead of the nearest rival, Circle’s USDC, which is reported at about $72 billion.

The audit news also comes as Tether continues investing in areas adjacent to stablecoin issuance. In the company’s reported 2025 performance narrative, Tether said it delivered more than $10 billion in net profit in 2025, with a larger share tied to income from US Treasury holdings and repurchase agreements. In the second quarter of 2025, Tether reportedly posted $1.5 billion in net operating profit, again with Treasury-related income highlighted as the main driver.

Tether has also used profits to fund expansion projects in traditional and crypto-adjacent markets, including investments in Argentine neobank Ualá and Brazilian crypto platform Mercado Bitcoin, each reported as $20 million this year. In addition, Tether has participated in a $50 million funding round for Eight Sleep, according to earlier coverage cited within the article.

At the tokenization layer, Tether’s commodity product is gaining visibility as well. The company’s tokenized gold offering, Tether Gold (XAUt), saw physical reserves increase by 9.5% in the second quarter, with the article noting that XAUt is currently the largest tokenized commodity product at around $2.7 billion in value, based on data from RWA.xyz.

Why investors and builders should watch the next step

An annual audit with an unqualified opinion is the kind of signal that can matter to institutions deciding whether to integrate stablecoins into payment, treasury, and tokenization workflows. It doesn’t automatically resolve every operational or regulatory question around stablecoins, but it does strengthen the credibility of Tether’s annual financial reporting process—especially when compared with periodic reserve attestations alone.

Going forward, market participants will likely focus on whether Tether repeats this level of audit scope in subsequent years and how regulators and counterparties interpret the audit’s evidence-based approach. With USDT still dominating stablecoin market share and Tether expanding into broader tokenized assets, the audited annual accounts may become an increasingly important reference point for due diligence.

The key question for the next cycle is whether this “first full independent audit” becomes a consistent feature of Tether’s transparency toolkit—and how quickly the wider market’s reliance on stablecoins translates into more standardized expectations for audited annual reporting across issuers.

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Neutrl has suspended minting, redemptions, and other protocol functions while it assesses an unspecified reserve issue affecting roughly $53.7 million of NUSD in circulation.

Neutrl pauses redemptions during reserve assessment

Neutrl said in an Aug. 13 X post that it had temporarily paused minting, redemptions, and other protocol functions following circumstances that affected the protocol’s reserves.

Acting on advice from legal counsel, the team said it imposed the restrictions to protect users’ interests and maintain an orderly process while assessing the impact. Neutrl did not provide an expected date for restoring the affected functions.

Users will receive a “clear and orderly process” at the appropriate time, according to the announcement. Details covering the timeline and next steps will be published once they become available.

No reserve asset, custodian, trading venue, or counterparty was identified in the post. Neutrl also did not disclose the value of the affected reserves or state whether the matter involves a realized loss, unavailable liquidity, an inaccurate valuation, or an operational issue.

Without those details, the announcement does not establish whether NUSD remains fully backed. It also provides no basis for identifying a specific reserve strategy or external company as the source of the problem.

NUSD reserve figures await recalculation

Neutrl’s reserve dashboard previously reported $91 million in assets against $90 million of outstanding NUSD as of June 21. The figures represented reserve coverage of 101.12% and a surplus of about $1 million.

At present, the dashboard no longer provides a detailed allocation across assets or venues. Sections covering reserve deployment, capital allocation, and solvency instead state that the figures are “being recalibrated” and will be updated soon.

According to the protocol’s documentation, NUSD is not backed only by cash or short-dated government securities. Neutrl allocates capital among liquid stablecoin holdings, yield-bearing assets, bilateral OTC positions, and market-neutral trading strategies.

OTC assets may be acquired at discounted prices and hedged when the positions are opened, the documentation states. Other returns can come from funding-rate or basis trades structured to reduce exposure to the direction of the underlying crypto market.

Custody, trading and settlement may take place across custodians, centralized venues and smart contracts. Neutrl lists Fireblocks and Ceffu among its custody and key-management partners, while its security page names Cantina, Spearbit, Sherlock, and Hypernative as audit or monitoring providers. The company does not claim that any of the named firms caused the present reserve issue.

In June, a crypto.news guide explained that synthetic dollars using hedged trading strategies carry different risks from fiat-backed payment stablecoins. Returns may depend on funding rates, basis spreads, or asset hedges, leaving holders exposed to market, protocol, liquidity, and counterparty conditions.

Neutrl’s model also relies on a liquid reserve buffer to process withdrawals. A January risk assessment by BA Labs said redemptions falling within the available buffer could normally be completed immediately, while larger requests could depend on the protocol converting or releasing less-liquid positions.

NUSD holds near $1 as liquidity remains limited

NUSD has remained close to its intended dollar value following the suspension. RWA.xyz placed the token at approximately $0.9984, while other available market feeds showed a 24-hour range of about $0.9981 to $0.9991.

Daily trading activity remained thin. Bybit showed approximately $23,000 in 24-hour volume, meaning the quoted price came from a relatively small amount of secondary-market trading.

A stablecoin depeg guide published in July noted that reserve backing can support a dollar peg only when holders can reach those reserves through functioning redemption channels. Neutrl’s direct redemption route is currently unavailable, although NUSD can still trade through decentralized liquidity pools.

Curve’s main NUSD-USDC pool held approximately $3.54 million at the latest available reading. Its balance consisted of about $1.83 million in NUSD and $1.71 million in USDC, leaving the pool split at roughly 52% and 48%.

Earlier liquidity was higher. BA Labs placed the same pool at about $5.2 million in January, with enough USDC at the time to exchange approximately 2.3 million NUSD within a 2% slippage range.

RWA.xyz reported about 53.7 million NUSD in circulation, down 18.4% over the preceding 30 days. Current supply is also well below the $90 million shown on Neutrl’s June reserve snapshot, but neither Neutrl nor the data provider has attributed the decrease to the newly disclosed reserve situation.

The same dashboard counted 615 NUSD holders and 347 active addresses over the previous 30 days. Monthly transfer volume stood near $71.4 million, down about 72% from the preceding period.

Strata restricts products built on Neutrl

Strata Markets also suspended minting and redemptions for structured products tied to Neutrl’s staked NUSD. The restrictions apply to srNUSD and jrNUSD, while Strata said its other markets continue to operate normally.

Under normal conditions, users can deposit sNUSD into Strata and receive either a senior or junior tranche. The senior token, srNUSD, receives a more stable share of the underlying return, while jrNUSD takes the first losses and receives leveraged exposure to yield after the senior allocation is paid.

Strata’s documentation lists a standard redemption fee of 0.05% for the senior tranche and 0.20% for the junior tranche. Fees and withdrawal conditions can change according to the market’s senior-coverage ratio.

CoinGecko placed the displayed market capitalization of srNUSD at about $1.4 million, based on roughly 1.3 million tokens. The tracker said srNUSD had not recorded active exchange trading for 18 days, with its quoted value of about $1.04 taken from the token contract rather than an active market.

Available snapshots placed the junior tranche between approximately $308,000 and $407,000 in on-chain value. Because jrNUSD is designed as the first-loss layer, its treatment will depend on the size and nature of any reserve impact disclosed by Neutrl or Strata.

U.S. rules exclude NUSD from payment stablecoin protections

RWA.xyz categorizes NUSD as a non-regulated synthetic dollar offered to non-U.S. investors. The platform lists Panama as its dispute-resolution jurisdiction and does not identify deposit insurance, a bankruptcy-remote structure, or a U.S. regulatory framework covering the token.

For American users who may have obtained NUSD through decentralized markets, the product does not carry the reserve rules applied to permitted U.S. payment stablecoins. The GENIUS Act framework requires covered issuers to maintain one-to-one backing in assets such as cash, insured deposits, short-dated Treasury bills, and Treasury-backed repurchase agreements.

The law also bars permitted payment-stablecoin issuers from paying yield directly to holders. Synthetic and yield-bearing tokens do not automatically receive payment-stablecoin status, particularly when their returns come from trading strategies or crypto collateral rather than the liquid reserve assets allowed under the statute.

GENIUS Act implementation is scheduled for the earlier of Jan. 18, 2027, or 120 days after regulators finalize the required rules. NUSD’s current product page identifies it as available to non-U.S. investors and lists USDC, USDT, and USDe among the assets accepted through its primary minting process.

Conflux Network has scheduled its v3.1.0 hard fork for Aug. 25, requiring node operators to install the update before seven network proposals and a private security fix take effect.

Conflux v3.1.0 requires a mandatory update

Conflux Network said in an Aug. 3 announcement that all nodes must install version 3.1.0 before the blockchain reaches epoch 155140000, which is expected on Aug. 25.

An epoch is a numbered stage in a blockchain’s operation. Conflux has used the target number to set the official deadline because the precise activation time can change depending on how quickly the network produces blocks.

Node operators who update before the deadline can install the new software and restart their systems. Conflux advised operators to complete the process within two days of beginning the update.

Operators who wait until after the target epoch will face a more difficult process. According to the announcement, they will have to remove their existing blockchain data, install the latest version, and download the network records again.

Nodes that remain on older software will no longer be fully compatible with the upgraded blockchain. Conflux warned that affected operators may be unable to download new blocks, process transactions, or continue mining.

The update also requires operators to replace an important settings file with the new copy included in the release. Using the old file will prevent a node from starting because version 3.1.0 applies stricter checks to its settings.

Operators who previously changed where their node stores data or records activity can transfer those choices to the replacement file. Conflux has also provided an updated list of entry points that nodes use when first connecting to other participants on the network.

A separate optional setting can reduce the amount of storage used by a node. Activating it will make the first restart take longer while the software rebuilds a current record of account balances and other network information, but later restarts should return to their normal duration.

Seven Conflux proposals will change network rules

Conflux plans to activate CIP-166, CIP-167, CIP-172, CIP-173, CIP-174, CIP-175 and CIP-176. A CIP, or Conflux Improvement Proposal, describes a planned change to the network’s rules or features.

Three proposals will make Conflux eSpace work more closely with applications built for Ethereum. eSpace is the part of Conflux that supports Ethereum-based smart contracts, wallets, and development tools.

CIP-166 adds a new operation that allows applications to count the empty digits at the start of a computer value. While mainly useful to developers, the change keeps Conflux aligned with a recent Ethereum network standard.

Under CIP-167, Conflux will add direct support for checking a type of digital signature commonly used by passkeys and online identity systems. Passkeys allow users to sign in through methods such as a fingerprint, facial scan, or device security code instead of entering a traditional password.

The proposal may help developers create wallets and applications with more familiar login systems. According to Conflux, the same signature method is already used by WebAuthn, the online authentication standard that supports passkeys.

For U.S.-based developers, the update provides a technical route for building applications that work with passkey systems already available on widely used devices and browsers. The Conflux announcement does not introduce separate trading, tax, or regulatory rules for American CFX holders.

CIP-174 will limit the size of information sent to a calculation-heavy network feature and increase the transaction fee charged for using it. Conflux linked the proposal to two Ethereum changes designed to prevent unusually large requests from consuming too many network resources.

Conflux previously expanded its Ethereum-compatible environment to support wallets, applications, and token transfers built around Ethereum standards. That design recently gained more importance for CFX traders after Upbit restricted deposits and withdrawals to Conflux eSpace.

As crypto.news previously reported, the South Korean exchange warned users that CFX sent through Core Space or another unsupported network could require a lengthy recovery process. Core Space is Conflux’s original operating environment, while eSpace supports Ethereum-compatible tools.

Transaction and staking problems will be corrected

Four proposals focus on flaws found in existing network behavior. CIP-172 will require every transaction added to a block to follow one approved format.

Conflux said the current issue can allow the same transaction to receive more than one identifying code. Since blockchain services use those codes to locate and verify transfers, the update will require a single standard format.

Nodes running the new software will begin rejecting incorrectly formatted transactions before the full hard fork takes effect. The early protection will apply as soon as an operator installs version 3.1.0.

CIP-173 addresses problems in the network’s process for reviewing disputes involving proof-of-stake validators. Validators lock CFX to help confirm network activity and can face penalties when they break the rules.

The proposal will also extend an existing lock on staked CFX to validators who have already started withdrawing their entire deposit. Conflux expects CIP-173 to activate at proof-of-stake block 3749400 on Aug. 26.

CIP-175 corrects a problem affecting certain calls between Core Space and eSpace. In some cases, the network did not properly recognize the permission that one account had given another account to act on its behalf.

CIP-176 fixes how the network prepares stored information for use during a transaction. When the same account appeared several times in a transaction’s access list, Conflux prepared only the information attached to its final appearance. Version 3.1.0 will process all relevant entries.

The software release also improves how the proof-of-stake system handles pending transactions and new block proposals. Conflux said existing nodes will not need to download the entire blockchain again solely because of the internal storage changes included in the release.

Major Conflux upgrades have previously drawn attention to CFX. In July 2025, coverage of Conflux 3.0 recorded a roughly 70% rally from $0.1450 to $0.2416 after the earlier update was announced.

Trading volume and open positions in the derivatives market also rose sharply during that period. The v3.1.0 announcement, however, provides no CFX price forecast and focuses on the steps required from network operators.

Security fix will remain private until the hard fork

Conflux said version 3.1.0 contains a fix for a security weakness but will not publish the related technical details until the network upgrade has been completed.

According to the project, an early disclosure could give attackers enough information to target nodes that have not yet installed the update. Conflux will therefore delay publishing the affected sections of its software until operators have had time to move to the protected version.

The team also warned operators against building their own version from the project’s latest unfinished software. Such copies may not match the official mainnet release and could cause an operator to follow a different version of the blockchain.

Conflux used a similar coordinated process in March 2025 when it repaired a flaw affecting how contracts were placed at blockchain addresses. Earlier security coverage reported that the problem could allow a contract to replace another contract already stored at the same address and return its settings to their original state.

The project said version 2.5 corrected the flaw after the ecosystem team, GraFun, privately reported it. GraFun received 60,000 CFX, including 50,000 CFX for finding the problem and 10,000 CFX for reporting it quickly enough to reduce the risk of exploitation.

Beyond the private security patch, version 3.1.0 repairs several crashes that could be caused by damaged messages from other nodes, incorrect requests sent to the network, or unusual information recorded on-chain.

The update also adds two new tools for eSpace services, improves controls that limit excessive requests, and corrects several errors in transaction records. Conflux has removed an older connection method while keeping the commonly used web and live connection options unchanged.

Additional maintenance work covers a crash during shutdown, excessive activity records during periods of heavy network use, and several outdated software parts. Version 3.1.0 also adds a meter that allows operators to monitor the number of transactions their nodes process in real time.

The City of Baltimore, led by Mayor Brendan Scott, has filed legal actions against two prediction-market platforms—Kalshi and Polymarket—arguing that both companies are effectively running sports-betting operations without the required licenses under Maryland law. The city’s notice, issued Thursday, also alleges that the firms misrepresented the legal status of their products to users.

According to a press release from Baltimore’s mayor’s office, the lawsuits contend that trades on event contracts should be treated as unlawful wagers under state gambling statutes, despite how each company characterizes the instruments. The complaints seek enforcement of consumer protection and gambling-related provisions, framing the dispute as a matter of whether the platforms can operate in Maryland when users are not told—and regulators do not agree—that the activity is legal.

Key takeaways

• Baltimore has sued Kalshi and Polymarket, asserting they run “illegal, unlicensed sports-betting” and mislead users about regulatory status.
• The city’s case centers on whether event contracts are actually wagers under Maryland law, disputing how both platforms describe the products.
• Kalshi’s complaint names multiple trading and brokerage partners, including Robinhood, Webull, and Coinbase, over marketing-related claims.
• The dispute adds to an ongoing U.S. federal-versus-state regulatory fight over prediction markets, with expectations of further appeals.
• Polymarket says city-specific enforcement conflicts with the federal framework for platforms operating under CFTC-registered exchange rules.

Baltimore targets “event contracts” as unlawful wagers

In Thursday’s notice, Baltimore’s mayor’s office said both companies operate what it describes as “illegal, unlicensed sports-betting platforms.” The city’s argument is not limited to licensing; it also alleges that the companies misled users about the legality and regulatory treatment of the products.

The core of the lawsuits is how the event contracts are classified. Baltimore argues that transactions conducted through prediction-market platforms are effectively betting arrangements that should be regulated as gambling under state law. The complaint challenges the platforms’ characterization of these instruments and argues that the trades function as wagers tied to real-world outcomes.

Mayor Brendan Scott said the companies are operating sportsbooks without licenses and suggested that simply rebranding the activity will not change what the city views as the underlying legal nature of the trades.

Kalshi case includes prominent distribution partners

One notable feature of Baltimore’s Kalshi-related complaint is the inclusion of well-known trading and brokerage firms as partners. The city’s filing lists Robinhood, Webull, and Coinbase among entities connected to the prediction-market platform.

Those companies were accused in the lawsuit of deceptive practices tied to marketing. Baltimore’s complaint alleges that promotional materials presented sports contracts in a way that suggested they could be “lawfully be purchased and traded in Maryland.” By naming these partners, the city is also broadening the enforcement target beyond the platform itself, implying that distribution and marketing conduct may be part of the alleged consumer harm.

For market participants, the inclusion of third-party partners raises the stakes of the dispute: if the litigation hinges on how contracts were marketed and interpreted by users, it could influence how other platforms structure compliance, disclosures, and listing terms across different jurisdictions.

Federal CFTC oversight remains the central fault line

Baltimore’s actions land in the middle of a wider regulatory dispute between federal and state authorities regarding prediction markets. Many experts expect these fights to escalate through appeals, potentially reaching the U.S. Supreme Court.

The disagreement reflects a long-running question: whether event contracts offered by prediction markets fall under the Commodity Futures Trading Commission’s (CFTC) regulatory authority. The CFTC, led by Chair Michael Selig, and companies have argued that event contracts on prediction markets meet the definition of “swaps” under federal oversight. State-level authorities, including Baltimore in this case, dispute that characterization and argue that local gambling laws can still apply.

This tension is not theoretical. Baltimore’s lawsuits explicitly frame the activity as illegal and unlicensed sports betting under Maryland law, while federal arguments emphasize that properly structured prediction-market trading is governed by federal rules rather than a patchwork of state requirements.

Polymarket pushes back on local enforcement

Polymarket responded to the lawsuits by arguing that Baltimore’s approach undermines the federal regulatory design for prediction markets. In a statement provided to Cointelegraph, a Polymarket spokesperson said city-specific action contradicts what they describe as the CFTC’s established framework.

The spokesperson added that courts have recognized prediction markets on CFTC-registered exchanges are governed by federal law rather than state-by-state enforcement. In other words, Polymarket’s position is that the legal classification—and the location of regulatory authority—should not change based on a city’s interpretation of gambling statutes.

The dispute matters for traders and users because a patchwork of enforcement could affect where and how prediction-market contracts are accessible, as well as how platforms handle geofencing, disclosures, and compliance processes across states and municipalities.

What comes next for Baltimore’s lawsuits

With both local action and federal oversight claims pointing in different directions, the most immediate question is how courts will treat the legal characterization of event contracts—particularly whether the transactions will be viewed as wagers under state gambling statutes or as instruments that belong within the CFTC’s federal regulatory scope. Readers should watch for how the cases progress through early rulings and whether higher courts are ultimately asked to settle the federal-versus-state divide.