In the U.S. capital markets sector, July brought major advancements in the digital assets and prediction markets spaces. Federal regulators took numerous steps to further legitimize digital assets, and the world’s largest prediction market made a strategic acquisition to bring their innovative event contracts to U.S. market participants, signaling growing momentum and acceptance of event contracts as financial instruments.
Advancing U.S. digital asset regulation
On July 31, the U.S. Securities and Exchange Commission Chair Paul Atkins unveiled “Project Crypto,” an initiative to overhaul current securities regulations to better accommodate blockchain technology and digital assets. Through this project, the SEC intends to provide further details on when a token qualifies as a security along with specific guidance on token distribution, trading, and custody.
Though Project Crypto is just getting underway, the SEC is likely to use interpretive and exemptive authorities for existing crypto issuers and exchanges in the meantime to encourage ongoing innovation. Furthermore, the SEC is exploring how more traditional markets can adapt to tokenization. As this initiative progresses, the U.S. should gain regulatory clarity around cryptocurrency, to further encourage innovation within the U.S. markets.
Another advancement for digital asset regulation came on July 17 when the president signed into law the GENIUS Act, which establishes federal regulation for payment stablecoins. This act requires payment stablecoins to be 100% reserve-backed with liquid assets, such as U.S. dollars or short-term treasuries, and requires public disclosure of the composition of the payment stablecoin issuer’s reserves.
The passing of the GENIUS Act is a significant step toward federal regulation and further legitimizing cryptocurrency. Also in mid-July, the U.S. House of Representatives voted to advance the CLARITY Act, which is complementary to the GENIUS Act. The CLARITY Act is currently under the consideration of the U.S. Senate and focuses on market structure and regulatory jurisdiction between the Commodity Futures Trading Commission and SEC. The Senate is expected to review the legislation by Sept. 30.
Read more of RSM’s insights for the capital markets sector.
Also on the regulation front last month, the SEC approved of in-kind creation and redemption for all spot Bitcoin and Ether exchange-traded products (ETPs). This adjustment allows authorized participants to exchange ETP shares directly for the underlying crypto asset instead of cash, reducing transaction costs, improving tax efficiency, and enhancing operational flexibility for issuers, participants, and investors.
Previously, these products were only redeemable for cash. This shift aligns ETPs to traditional commodity-based exchange traded funds (ETFs) from a redemption perspective, strengthening the integration of crypto into mainstream U.S. financial markets.
Given these regulatory changes, capital markets organizations should feel more confident exploring the digital asset space. With clearer guardrails in place, or on the horizon, there is a growing regulatory legitimacy and structure. These developments also signal increasing investor demand. Firms should evaluate whether digital assets align with their strategic direction and growth objectives.
Strategic acquisition fuels event contracts and prediction markets
On July 21, Polymarket, the world’s largest prediction market, announced its $112 million acquisition of QCEX, a CFTC-licensed exchange and clearinghouse. This acquisition allows Polymarket to enter the U.S. market legally and allows U.S. investor access to Polymarket’s event contracts, which were previously restricted to international markets. QCEX holds both a designated contract market and derivatives clearing organization license with the CFTC, a requirement to operate a compliant futures exchange in the U.S. During the first half of 2025, $6 billion in predictions were made on the Polymarket platform. Given the platform is now available in the U.S., this figure is expected to grow, especially as prediction markets continue to gain traction within the U.S.
With investor acceptance and the demand for event contracts growing, these instruments appear to be part of the future of derivatives investing. Brokerages and other new prediction markets looking to enter the event contract space should consider the following:
- Data trust and integrity: Ensure the data sources used to determine settlement are reliable, complete and accurate to foster investor trust and participation, in turn increasing liquidity in these markets.
- Security and compliance: Comply with the system development lifecycle requirements and deploy safeguards to ensure the security of offerings and related platforms.
- Agility and support: Remain sufficiently nimble to adapt operations quickly for prompt entry into the market. Organizations may need to supplement their workforce with service providers to meet investor demands for event contracts.
The takeaway
With these advancements, the U.S. is positioning itself as a global leader for financial innovation. Positioned by these developments in July, digital assets, tokenization, event contracts and related innovative products will play a crucial role in the capital markets space; organizations will need to adapt. Broker-dealers, exchanges, and clearinghouses should closely evaluate these regulatory developments and product developments when assessing their product strategies, compliance frameworks, and technology roadmaps.
