Congress members Adrian Smith and Nikki Budzinski have introduced a new bill that, if passed, will ban government officials from making trades in prediction platforms such as Polymarket and Kalshi, as per an official press release.
The update comes amid a swell in the number of lawsuits filed against prediction platforms by state regulators in the U.S. The complaints are numerous, usually ranging from unlicensed sports betting activities to insider trading on significant geopolitical events such as the U.S.-Iran conflict.
Civil fine of 10% and confiscation of profits
If the bill passes, the President, Vice President, Congress Members, and other political appointees will not be able to make trades on prediction platforms. If they do so, a penalty of 10% in the form of a civil fine will be imposed, with profits from the trade to be paid into the U.S. treasury.
The new bill forms part of a larger issue that blames the Trump Administration for allowing the rampant expansion of cryptocurrency firms. The pro-market era created in U.S. President Donald Trump’s second term as president has created considerable market volatility due to tariffs, crypto-friendly regulation, and interference in Iran and Venezuela.
Polymarket faces bans worldwide while U.S. officials navigate scrutiny for possible insider trading
Polymarket updated its set of market integrity rules earlier this week to help identify instances of insider trading after coming under scrutiny with bans from Argentina and U.S. states such as Nevada and Massachusetts.
Government officials in the U.S. administration have been the focus of suspicion after two anonymous traders benefited. One user earned $400,000 betting on the capture of Venezuelan president Nicolas Maduro, while another trader by the name of “Magmyman” earned $553,000 after a U.S.-Israel coalition fired strikes on Iran.