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Good Morning Crypto Enthusiasts!

Glad to have you back for another edition of the UseTheBitcoin.com newsletter.

1. Kalshi Gambling Lawsuit: Kalshi is under heavy legal pressure after Washington State sued, arguing its event contracts function like illegal online sports betting.

2. Coinbase Betting Backlash: Coinbase drew criticism after users were flooded with March Madness betting push notifications tied to its Kalshi partnership. CEO Brian Armstrong blamed the surge on a technical glitch.

3. P2P.me Bet Controversy: P2P.me sparked outrage after revealing team members bet on whether their own fundraising round would hit $6 million. Since insiders could directly influence the outcome, the incident raised major ethics and transparency concerns.

4. 💡Feature of the Day - US Crypto Tax Bill: The proposed Digital Asset PARITY Act introduces a $200 tax exemption for stablecoin transactions, potentially making small everyday crypto payments far easier in the US.

   
   All this and more in today’s headlines!

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📰 News Highlights:

Kalshi Legal Crisis [Source][Source][Source]

Kalshi is facing mounting legal pressure as Washington State Attorney General Nick Brown filed a sweeping lawsuit, arguing the platform’s event contracts operate no differently from illegal online sportsbooks. The complaint says Kalshi is bypassing strict state gambling oversight, violating both the Washington Consumer Protection Act and the Gambling Act.

State regulators argue that simply renaming betting as “prediction” doesn’t change the core mechanic: users still risk money on future events for a payout. This latest action follows similar aggressive moves in Nevada, where a temporary restraining order was issued, and in Arizona, where criminal charges targeted election-based contracts.

At the center of the dispute is a major jurisdictional gray zone. Kalshi maintains that its contracts fall under federal commodity law and should be overseen exclusively by the CFTC, while states insist they still have the right to enforce local gambling bans. Kalshi has already tried moving the Washington case to federal court, calling the lawsuit an abrupt escalation without prior dialogue.

As more states push back, the outcome could decide whether prediction markets evolve into a nationwide financial utility or end up fragmented into a state-by-state patchwork similar to the early sports-betting era.

Coinbase Betting Backlash [Source][Source][Source]

Coinbase is taking heat after users complained about a flood of push notifications encouraging bets on college basketball games during March Madness. The alerts were tied to Coinbase’s 2026 prediction-market partnership with Kalshi, but many long-time users felt the app was starting to resemble a gambling platform rather than a disciplined crypto trading tool.

CEO Brian Armstrong later acknowledged the issue, blaming the unusually high alert volume on a technical glitch and admitting the company “missed the mark.”

The backlash lands at a sensitive moment, as lawmakers in Washington are already debating stricter rules for prediction markets. New proposals, including the STOP Corrupt Bets Act, aim to prevent insider-style wagering on elections, military strikes, and other geopolitical events.

Critics worry that people with privileged access to policy or national-security information could exploit these platforms for near-certain profits. Beyond the annoying alerts, many users now see the bigger issue as a cultural shift in Coinbase’s risk philosophy, especially for a platform entrusted with billions in customer assets.

P2P Fundraising Bet [Source][Source][Source][Source]

P2P.me sparked controversy after admitting that team members placed prediction-market bets on whether their own fundraising round would hit a $6 million target. The raise ultimately closed at $5.2 million, making the “No” outcome profitable.

While the team said the account was clearly labeled “P2P Team,” the bigger issue was obvious: they were trading on an outcome they could directly influence. That immediately raised concerns about ethics, transparency, and insider advantages in DeFi fundraising.

The incident has become a perfect example of why regulators are moving toward stricter prediction-market manipulation rules. Lawmakers recently introduced the PREDICT Act, aimed at preventing insiders from profiting off non-public operational knowledge.

After community backlash, P2P.me apologized, promised to return any profits to the MetaDAO treasury, and introduced a formal internal policy banning contributors from trading contracts tied to project milestones.

By closing all positions and tightening governance, the team is now trying to rebuild trust and refocus attention on its decentralized trading mission.

💡 Feature of the Day: 

Crypto Tax Draft [Source][Source][Source]

A new US discussion bill, the Digital Asset PARITY Act, could significantly reshape crypto taxation rules. Its headline proposal is a $200 de minimis tax exemption for stablecoin transactions, which would remove capital gains calculations for everyday small purchases like coffee or local services.

Supporters say this could finally make stablecoins practical as a real payment rail in the US. The bill also introduces clearer rules for staking rewards and validator income, requiring them to be treated as annual gross income based on fair market value at the time they are received.

The biggest controversy is what the bill leaves out: Bitcoin. BTC does not qualify for the same $200 exemption, meaning even tiny Bitcoin payments would still trigger taxable events. That exclusion has triggered strong criticism from Bitcoin advocates, who argue stablecoins are being unfairly favored over truly decentralized money.

As the bill remains in discussion draft form, it’s already setting up a major lobbying battle between stablecoin issuers, crypto advocacy groups, and the Bitcoin community over how digital money should be treated under US tax law.

😂 Crypto Meme of the Day: 

Meme of the day provided by @scannergr1

And that’s it for this today.

See you all tomorrow’s edition!

Jonathan Gibson
UseTheBitcoin.com