1. Federal Court Enjoins Illinois From Enforcing Certain Gambling Laws Against Prediction Markets
On October 30, the U.S. District Court for the Northern District of Illinois entered a preliminary injunction prohibiting Illinois officials from enforcing state gambling laws against the trading of swaps, including sports-related event contracts, listed on or available through Commodity Futures Trading Commission (CFTC)-regulated designated contract markets and futures commission merchants. The injunction follows the court’s October 2 ruling in consolidated litigation involving Kalshi, Coinbase, and the CFTC, in which the court concluded that the plaintiffs were likely to succeed on their claims that the Commodity Exchange Act preempts certain Illinois gambling laws as applied to federally regulated event contracts. The injunction restricts enforcement of covered licensing requirements, associated fees and taxes, and certain civil and criminal provisions and investigative processes. The ruling represents a significant development in the ongoing dispute over the respective authority of federal and state regulators to oversee prediction markets. See the preliminary injunction here.
2. CFTC Files Lawsuit To Block State Enforcement in Utah
On October 26, the CFTC filed a lawsuit against the State of Utah and the Attorney General in the U.S. District Court for the District of Utah following Utah’s decision to file civil enforcement actions against CFTC-regulated markets and other industry participants such as market makers. Utah claims event contracts are “indistinguishable from the bets offered by a traditional sportsbook” and that offering them violates Utah’s gambling, fringe gambling, and election-wagering laws. The CFTC’s response is that event contracts are “swaps” under the Commodity Exchange Act and that the CFTC has “exclusive jurisdiction” over swaps traded on designated contract markets (DCMs). On that basis, it argues that Utah’s laws are preempted three ways: expressly, by occupation of the field, and by conflict. It also flags a direct conflict: A state ban would force DCMs to breach the CFTC’s “impartial access” rule and could open them up to “50 regulators across the country.”
Courts have entered preliminary injunctions favoring federal preemption in Arizona, Illinois, and Minnesota. The Third Circuit has also ruled for Kalshi in KalshiEX, LLC v. Flaherty. The complaint also lays out the CFTC’s fast-moving rulemaking agenda, which includes the October 19 interim final rule confirming that state-licensed sportsbook and casino wagers are not swaps and proposed rules that would expressly treat sports, political, cultural, and weather event contracts as swaps. See the CFTC’s press release here and a copy of the complaint here.
3. CFTC Announces Availability of Equity Perpetual Futures on U.S. Regulated Exchanges
On November 3, CFTC Chairman Michael S. Selig announced that perpetual futures contracts on individual equity securities may begin trading for the first time on certain CFTC-registered exchanges. According to Chairman Selig, the contracts, known as equity perpetual futures, were deemed approved by the CFTC pursuant to Regulation 40.3 as security futures products under the Commodity Futures Modernization Act of 2000. As security futures products, the contracts are subject to applicable requirements of the Commodity Exchange Act and federal securities laws, as well as the regulatory oversight of both the CFTC and the SEC. Trading may occur on designated contract markets that are also registered with the SEC as notice-registered national securities exchanges authorized to trade security futures products. The announcement follows the CFTC's approval in May 2026 of the first bitcoin perpetual futures contract on a CFTC-regulated exchange and builds on a March 2026 memorandum of understanding between the CFTC and SEC concerning regulatory coordination. Chairman Selig characterized the development as part of the agencies' efforts to facilitate financial innovation within U.S. regulated markets while maintaining investor and customer protections. See the statement here.
4. SEC Grants Exemptive Relief From Treasury Clearing Requirements for Certain Repo Transactions
On October 30, the U.S. Securities and Exchange Commission (SEC) announced that it had granted exemptive relief from its mandatory central clearing requirements for certain repurchase agreement (repo) transactions involving U.S. Treasury securities. Specifically, the relief excludes from the definition of “eligible secondary market transactions” (i) certain repo transactions involving non-U.S. counterparties, subject to specified limitations and conditions, and (ii) certain repo transactions between a direct participant of a U.S. Treasury securities clearing agency and an affiliated entity that is not an “investment company” as defined in Section 3 of the Investment Company Act of 1940, provided that the entity otherwise satisfies the definition of an affiliated counterparty under Exchange Act Rule 17ad-22(a). The relief follows requests from market participants concerning the application of the SEC’s Treasury clearing rules to cross-border and inter-affiliate transactions. According to the SEC, the targeted exemptions are intended to address practical implementation challenges while preserving the benefits of central clearing. The compliance deadlines remain December 31, 2026, for eligible cash market transactions and June 30, 2027, for eligible repo market transactions. See the press release here and the order here.
5. HKMA Expands Project Ensemble To Enable 24/7 Tokenized Settlement
On November 2, the Hong Kong Monetary Authority (HKMA) announced that EnsembleTX, the pilot phase of its Project Ensemble initiative, had been expanded to support 24/7 interbank settlement of tokenized deposit transactions using tokenized central bank money. The new capability allows participating banks and other industry participants to settle tokenized transactions outside conventional operating hours, supporting applications such as corporate treasury management and transactions involving tokenized investment products. The HKMA reported that participation in EnsembleTX had increased to 12 banks and 20 industry participants. Separately, the HKMA announced that it had completed trial trades involving recognized dealers conducting secondary-market transactions in tokenized Exchange Fund Bills and that it plans to expand those trials to include regulated stablecoins. See the press release here.
