Stefan Schropp

Sr. Reg. Counsel @Paradigm. Posting tech law & policy, baseball, and dogs. Former @RopesGray, @UNC_Law, & @YaleBaseball. Opinions somebody’s.

[Justin Slaughter @JBSDC]

The new KPOW index from @Kalshi hasn’t gotten the attention it deserves. It’s a big deal. @Katiebiber and I wrote about how KPOW is a critical change in how information travels: a single index that let’s political info travel up from the people, not just down from elites like media institutions, consultants, and analysts.

KPOW turns political power into a conversation. Markets aren’t magic, but in an era when everything is up for debate, they allow people to put their money behind their opinions. That, at least, can be one last, best, source of light in a storm.

[Stefan Schropp @SPSchropp]

Link: https://t.co/AkqJpHzKhQ

[Stefan Schropp @SPSchropp]

And of course, with another comment period closed, the great @mparker5102 has updated the Paradigm GENIUS tracker with every new comment. Stay up to date with all things regulatory 👇

[Stefan Schropp @SPSchropp]

Continuing the GENIUS rulemaking sprint, @Paradigm filed a comment today on @USTreasury's proposed rule governing when a state regime is “substantially similar” to the federal one for stablecoin issuers. Treasury got the core architecture right, but there is room for improvement.

[Paul Grewal @iampaulgrewal]

Not really. There's nothing to debate, according to the US Court of Appeals for the Third Circuit. "The outcome of a sports event certainly can be associated with a potential financial, economic, or commercial consequence. The District Court did not clearly err when it identified numerous affected stakeholders, including sponsors, advertisers, television networks, franchises, and local and national communities. The analysis need not go further."

[Stefan Schropp @SPSchropp]

GENIUS created a genuine dual federal-state regime. These fixes keep the state pathway from existing only on paper. Grateful for Treasury’s engagement—getting this right matters for competition and consumers alike. Our full comment is below.
https://t.co/iWnYdeZQA0

[Stefan Schropp @SPSchropp]

Continuing the GENIUS rulemaking sprint, @Paradigm filed a comment today on @USTreasury's proposed rule governing when a state regime is “substantially similar” to the federal one for stablecoin issuers. Treasury got the core architecture right, but there is room for improvement.

[Stefan Schropp @SPSchropp]

Finally, keep the two paths on equal footing. States should not be permitted to expand (just as they can’t narrow) the Act’s yield provisions, and “substantial similarity” should include the Act’s passporting rule so host states can’t pile on duplicative licensing.

[Stefan Schropp @SPSchropp]

I’m reminded today that many judges, including on the Mass. Supreme Judicial Court, seem confused about how Kalshi differs from sportsbooks. Allow me to introduce Exhibit A:

[Fairplaygov @fairplaygov]

This is the first sportsbook limiting notice email as newly mandated that I've seen reported today in Massachusetts.

Between this boilerplate language & Caesars simply choosing to close accounts instead in some cases, the sportsbooks are now just making a mockery of @MassGamingComm.

[Jacob Robinson @JacobRobinsonJD]

Over a trillion dollars worth of perps are traded every month, yet 99% people have never heard of them.

This @LawofCodeFM episode is a multi-hour deep dive on perps, starting from the history of grain futures in Chicago to Friday's historic @CFTC announcements. It took me months to put this together.

My goal: the internet's most comprehensive explainer on perps.

You'll hear from the world's leading experts on the legal layer of perps; @jchervinsky and @BradBourque of @HyperliquidPC, @BrettHarrison of @Architect_Fi, @kkirkbos, @_Ryne_Miller, @mdf2000 and David Shafer of @coinbase.

By the end of this episode, I promise you'll be in the top percentile for understanding perps, regardless of where you're starting from.

(You just might need to listen twice. There's a lot here.)

Timestamps:

0:00 Intro
4:04 What is a perp @BrettHarrison
7:18 Why futures contracts exist
8:15 Liquidity fragmentation
11:01 History of U.S. futures @_Ryne_Miller
17:08 Richard Nixon, the gold standard and financial futures
21:27 Birth of the CFTC
24:27 Robert Shiller's 1992 paper @kkirkbos
30:09 Price convergence
32:00 The funding rate
43:41 Oracles and manipulation risk
47:39 Are perps swaps or futures?
52:44 A @ChairmanSelig clip on perps
54:02 The DCM framework
59:16 DCMs, DCOs and FCMs explained
1:04:55 History of crypto perps (BitMEX)
1:13:00 How Hyperliquid works
1:25:41 CFTC's historic announcements on May 29, 2026
1:35:00 Fireside with @jchervinsky and @BradBourque of @HyperliquidPC

Nothing in this podcast is legal or investment advice.

[Stefan Schropp @SPSchropp]

Some threshold Qs:

(1) Are event contracts offered “under this Act” if, as IL argues in court, PMs can’t operate in the state? Seems like the core complaint is that PMs are *not* offering wagers “under this Act.”

(2) The 5m threshold applies to a “licensee,” which again IL is arguing is the problem (they don’t have state gambling licenses) in court.

[Fairplaygov @fairplaygov]

Illinois lawmakers passed a prediction market transaction tax on sports-based event contracts overnight as part of the state budget. It would be the first of its kind to "go into effect" on July 1.

The state expects PMs to pay 1.75% on each wager for the first 5 million transactions & then 3.5% after that. Non-sports markets are exempt.

This will lead to more legal filings from the PM side. The CFTC has already sued Governor JB Pritzker, Attorney General Kwame Raoul, and the Illinois Gaming Board over PMs.

[Brian Quintenz @BrianQuintenz]

This is nuts. And it is certainly not DeFi. https://t.co/0Tq34z9Kcx

[Stefan Schropp @SPSchropp]

Got to respect RI for putting the protectionism that actually animates this entire fight front and center I guess.

Can’t imagine this is the ground they want to stake out for SCOTUS though…

[Daniel Wallach @WALLACHLEGAL]

State AG: "The Rhode Island Lottery has already observed an impact from the expansion of prediction markets, with bets decreasing 8% from 2024 to 2025."

[Noah Zingler-Sternig @Nostroah]

My favorite part about this campaign against @Kalshi is that their first example of "trillion-dollar market maker" is a college student in Charlottesville.

If a top-5 trader on your platform is a college student, you have successfully democratized finance.

[Adam Cochran (adamscochran.eth) @adamscochran]

Regardless of what you think of Prediction Markets, this is not constitutional.

The Supremacy Clause of the United States means that a state cannot ban something that is federally regulated.

It's the same law that means states can't opt out of federally regulated medications, or recognizing gay marriage.

A state can choose not to enforce on something that is federally illegal (like marijuana) but it cannot opt-out of something that is federally regulated.

[Stefan Schropp @SPSchropp]

Laughed out loud at the use of “prepaid” here lest the entire analogy fall apart.

[Vance Ginn @VanceGinn]

3/ Here’s a simple analogy:

A prepaid debit card and a savings account are not the same product.

One is mainly for payments.

The other stores money and pays a return.

Stablecoins can modernize payments, but yield changes what is the product.

[Brian Quintenz @BrianQuintenz]

Minnesota might as well try to ban the NYSE. States can't ban federally regulated exchanges. Doing so is a blatant violation of the constitution and federal law (and a giant waste of taxpayer resources and everyone’s time).

Outside of this ban being unenforceable, it's also a terrible idea for the citizens of Minnesota. It would seek to reduce competition and hedging opportunities while also driving activity offshore.

[Elisabeth Diana @ediyork]

Peak hypocrisy: MN banning prediction markets while its gov't collects millions a year from slot machines, poker games, roulette tables, and casino games. Does anyone believe that casinos are safe and well-regulated, but CFTC-registered exchanges and clearinghouses are not?