The U.S. government is making its clearest case yet that betting on sports can be regulated as finance, not gambling.

In a filing late Tuesday, the Commodity Futures Trading Commission and Department of Justice asked a federal court to block Arizona from enforcing its gambling laws against prediction market operator Kalshi. The agencies argue that contracts tied to sports, elections and other real-world events are financial derivatives known as “swaps,” placing them under federal oversight.

If the courts agree, it could shift control of a fast-growing market away from states and into Washington, allowing prediction platforms to operate nationwide under a single set of rules.

But at the center of the case is a simple question: what exactly constitutes a bet?

Arizona and a growing number of states say contracts on sports outcomes function just like traditional wagers and should be regulated as gambling, with licensing requirements, age restrictions, and consumer protections.

Arizona has gone further than most, however, filing criminal charges against Kalshi under state betting laws, with an arraignment scheduled for April 13.

Federal regulators see it differently. In their filing, they argue that what matters is how the contracts are structured, not what they track. Because the payouts depend on whether a future event happens, and that event can have economic consequences, the products fall under the same legal framework as derivatives tied to commodities or interest rates.

That interpretation would put prediction markets firmly under the Commodity Exchange Act, where the CFTC has what it describes as “exclusive jurisdiction.” It would also limit the ability of individual states to shut down or restrict these platforms, something regulators warn would otherwise create a fragmented, state-by-state system.

The legal fight has been building for months and is now starting to produce conflicting rulings. As CoinDesk previously reported, a federal appeals court in New Jersey recently sided with Kalshi, finding that its sports contracts are presumptively allowed under federal law unless the CFTC intervenes. But courts in other jurisdictions have been more receptive to state arguments, allowing enforcement actions to move forward.

In its filing, the government warned that allowing states to prosecute federally regulated exchanges would undermine a national market that Congress intended to oversee at the federal level.

If courts ultimately accept the CFTC’s position, prediction markets could operate nationwide under a single federal framework, effectively bypassing the state-by-state system that governs sports betting today. If they reject it, the products could be forced into existing gambling regimes or shut down altogether in key jurisdictions.

For now, the federal government is taking an expansive view of its authority, arguing that a contract on the Super Bowl is not fundamentally different from one tied to oil prices or interest rates.

Courts now have to decide if that comparison holds.

Bitcoin’s push toward $73,000 has lost traction, leaving the market exposed to renewed downside risks as macro uncertainty returned.

The flagship cryptocurrency climbed to a weekly high of $72,698 on Tuesday, gaining nearly 6% in under four hours as global markets responded to news of a two-week ceasefire agreement between the United States and Iran. 

Bitcoin rose as risk sentiment improved, as expectations that the Strait of Hormuz could reopen helped ease supply concerns.

However, the short period of euphoria faded quickly near the $72,000 level. A wave of liquidations hit derivatives markets at that point. More than $150 million in long positions were wiped out, confirming that bullish conviction remains weak at higher levels.

Price action also continued to track movements in traditional markets, with Bitcoin showing a tight correlation to S&P 500 futures during the rally. The link points to a market still heavily influenced by macro headlines rather than internal crypto-specific drivers.

Now, tensions surrounding the ceasefire have since raised fresh concerns. US Vice President JD Vance described the agreement as a “fragile truce,” while developments on the ground painted a less stable picture. 

Reports from the Levant indicated repeated violations, with Israel launching “Operation Eternal Darkness” targeting underground infrastructure tied to Hezbollah in Lebanon.

Israeli officials maintained that their operations fall outside the scope of the Iran ceasefire, citing strategic independence.

Further strain came after Iran’s parliamentary speaker accused Washington of violating “the spirit of the roadmap,” warning that Tehran could resume strikes if attacks on its allies continue. 

Any breakdown in the agreement risks reigniting conflict, a scenario that could weigh heavily on risk assets, including cryptocurrencies.

Market positioning remains sensitive to these developments. Bitcoin has struggled to secure a firm hold above $70,000 over the past week, and a sustained move below that level could open the door for a retest of the $64,000 support zone.

At last check, Bitcoin was trading just above $71,000, down less than 1% over the past 24 hours, as traders weighed the combined impact of geopolitical instability and shifting policy expectations.

Attention has also turned to monetary policy signals. Minutes from the Federal Reserve’s March 17–18 meeting showed that officials voted 11–1 to keep rates unchanged at 3.5% to 3.75%, while leaving the door open for potential cuts later this year.

The details of the discussion, however, pointed to caution. Policymakers signaled that any move toward easing would depend on inflation staying contained, particularly as energy prices remain a concern. Some members indicated that a tighter policy could still be required if price pressures persist.

Interest rate expectations continue to play a key role in crypto market sentiment. While lower rates tend to support risk assets, uncertainty around the timing of cuts can dampen demand and increase volatility.

Despite all the negative geopolitical headwinds, Bitcoin price could find some support and potentially decouple from traditional risk-off sentiment if reports of Iran circumventing traditional financial sanctions by using Bitcoin to facilitate trade at the Strait of Hormuz are confirmed.

On April 8, several regional maritime intelligence outlets reported that the Iranian Revolutionary Guard Corps (IRGC) was charging transit fees for commercial vessels with the option for direct payment in Bitcoin. If this is confirmed, it could help keep momentum afloat by providing a fundamental floor of demand in the short-term.

Blockchain analysis firm Chainalysis estimates that stablecoin volumes could hit a lofty $1.5 quadrillion within the next decade, beating the total volume of global cross-border payments today. 

In a report on Wednesday, the Chainalysis team said that adjusted stablecoin volume could hit $719 trillion by 2035 just through organic growth, up from $28 trillion in 2025.

However, this figure could double by 2035 if two major catalysts come into play, said Chainalysis — the baby boomer generation passing $100 trillion in wealth to a crypto-loving generation and stablecoins knocking over traditional payment rails to become the default payment infrastructure. 

“Factor in these catalysts, and our projections change: 2035 volumes could approach $1.5 quadrillion, a figure that would surpass the estimated $1 quadrillion in global cross-border payments today,” Chainalysis said.

The figure, should it come to pass, suggests that the stablecoin industry is extremely undervalued. It could be seen as a very generous estimate, as it would eclipse the annual volume of cross-border remittances, which was estimated at $865 billion in 2023 and $905 billion in 2024.

The number is even higher than World Population Review’s latest estimate of the total value of all global assets across banks, property and cash, which is around $662 trillion.

Even the $719 trillion would mean that stablecoins would need to continue their compound annual growth rate of 133% for the next decade. 

$1.5 quadrillion stablecoin volume possible: Analyst

Rachael Lucas, a crypto analyst at Australian crypto exchange BTC Markets, told Cointelegraph $1.5 quadrillion is “a ceiling-case scenario, not a base case,” but said it could be possible, because growth is accelerating. 

She also noted that volume measures how many times money moves, not how much exists; the same dollar can settle dozens of transactions a day.

Related: Stablecoin yields won’t harm banks, White House economists say

“The infrastructure is being built right now. Stripe acquiring Bridge, Mastercard partnering with BVNK, these are operational bets, not experiments. Add regulatory clarity from the GENIUS Act, and institutional participation can scale in ways that simply were not possible before,” she added.

“The generational wealth transfer will do the rest. Millennials and Gen Z are the first generations for whom on-chain is a default, not a deliberate choice.”

A January OKX survey found that among younger Americans, 40% of Gen Z and 36% of Millennials plan to increase their crypto activity this year, compared with 11% of Boomers.

Meanwhile, stablecoins are frequently cited as a major driver of crypto adoption. A September report by EY-Parthenon, the strategy consulting division of Ernst & Young, found that 13% of financial institutions and corporates globally use stablecoins and 54% of non-users expect to adopt them within 12 months.

Magazine: No more 85% Bitcoin collapses, Taiwan needs BTC war reserve: Hodler’s Digest