A New Red Line for Crypto? Washington Targets On‑Chain “Death Bets” In Prediction Markets

A Democratic U.S. Senator from California is introducing new legislation targeting crypto‑driven prediction markets

The current law, the Commodity Exchange Act, gives authority to the CFTC to bar contracts tied to terrorism, war or assassination if they are deemed to be “contrary to the public interest”. Schiff’s proposed bill would revoke such flexibility: the senator argues that the agency has too much discretion as it rewrites prediction‑market rules under Chair Mike Selig:

At a time when CFTC Chair Selig has indicated that he will rewrite the rules on prediction markets, the CFTC can no longer be granted this discretion. The DEATH BETS Act will unequivocally ban these contracts.

In Senator Schiff’s words, the prediction markets have turned into “the Wild West”:

There is no justification for gambling on lives, or public benefit to be derived by such a market. With regulators turning a blind eye, prediction markets have rapidly become the Wild West.

Rep. Levin stressed the importance of not letting “someone make money off the outbreak of war or the deaths of American service members”.

We already saw what that looks like: over half a billion dollars was wagered on the timing of U.S. military strikes on Iran alone. That is unacceptable, and this legislation puts a stop to it.

Under the DEATH BET Act, CFTC‑supervised platforms will likely become safer but more limited, while riskier war/death flows are pushed further into offshore or permissionless crypto venues, where legal and reputational risks spike. Bets on elections, inflation points and macro data will continue to be safe game, but Washington aims to draw the line on banally “gambling” with the lives of real people.

The DEATH BET Act isn’t a ban on crypto prediction markets, but it is a signal that the next regulatory battles in crypto won’t just be over Bitcoin or ETFs: they’ll be over what the industry considers acceptable to let people bet on.

Cover image from Perplexity, BTCUSDT chart from Tradingview