Good morning. In the latest salvo in the battle over who regulates prediction markets, New York Attorney General Letitia James filed lawsuits against crypto exchanges Coinbase and Gemini, accusing them of operating prediction markets that violate state gambling laws.

• Who’s not in the suit? The suits filed Tuesday are notable for whom they left out: Kalshi and Polymarket, which have dominated the rapidly growing world of “event contract” markets that the companies say are more akin to trading. The “yes/no” contracts allow people to bet on what might happen with everyday events, such as the economy or election results. The cases against Coinbase and Gemini say that “each contract is a bet.”
   
• More to come? The suits from James, a Democrat, are something of a trial balloon in a crowded landscape of state litigation that ultimately could reach the Supreme Court. Should New York fail to win its cases against the crypto exchanges, the attorney general’s office still could bring cases against other prediction-market operators.
   
• Background: Prediction-market operators have been in the middle of a tug of war between state and federal regulators. Since 2024, the platforms have surged in popularity, thanks in large part to the explosion of sports betting. The Commodity Futures Trading Commission says it regulates the platforms, which has opened the door for the companies to bypass state gambling regulators that collect taxes.

U.S. moves to cut back private fund risk reporting.

U.S. financial regulators are weighing a reduction in risk reporting requirements for private funds, Risk Journal reports, as some investors grow nervous about a portion of the market dedicated to lending (free link).

The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission said Monday they were considering eliminating risk reporting requirements for investment advisers with less than $1 billion in private fund assets under management, raising the threshold from $150 million. SEC Chair Paul Atkins said the previous reporting requirements were overly burdensome for advisers without a commensurate benefit for regulators.

• SEC Chair Atkins Wants to ‘Make IPOs Great Again.’

Key moments from Kevin Warsh’s Congressional testimony.

Kevin Warsh, President Trump’s pick to lead the Federal Reserve, fielded questions at his confirmation hearing Tuesday about his commitment to an independent monetary policy, his pre-nomination argument that AI-driven productivity gains would give the central bank room to cut interest rates and his plans to divest more than $100 million in financial holdings he has declined to fully disclose.

Kevin Warsh in his testimony also suggested he would have few qualms about opening the U.S. banking system’s doors further to cryptocurrency.

• Japan’s cabinet formally revised the nation’s Three Principles on defense equipment transfers on Tuesday, Risk Journal reports, scrapping a longstanding ban on lethal weapons exports in the most significant change to the country’s postwar arms sales posture since World War II (free link). 
   
• President Trump said it was “possible” the White House and Anthropic could make a deal to use the AI giant’s technology in the Defense Department after the company’s chief executive met with administration officials last week.
   
• The U.K.’s communications services watchdog said it would investigate whether messaging app Telegram is doing enough to prevent child sexual abuse material being shared on its platform in the latest effort by a European regulator to scrutinize tech companies over minors’ safety.
   
• An Iranian national arrested in Panama last year and charged with conspiring to violate U.S. sanctions against Iran was extradited to the U.S., the U.S. Attorney’s Office for the Western District of Washington announced Monday (free link).
   
• As federal regulators scrutinize the migration of sports to streaming, the NFL is going on the offensive, meeting last week with senior Federal Communications Commission officials to justify the league’s media-rights strategy.
   
• Italy’s competition watchdog launched an investigation into Booking.com, saying the online travel company might be misleading users into believing that accommodation providers who pay higher fees for greater visibility offer better value for money than others.

The Dow Jones Risk Journal Summit London on May 7 will convene senior business professionals for discussions on a range of corporate risks including supply chains, artificial intelligence, geopolitics and financial crime.

Speakers include: Kathy Wengel, EVP, Chief Technical Operations and Risk Officer, Johnson & Johnson; Nish Imthiyaz, Global Privacy and Responsible AI Counsel, Vodafone; and Will Mayes, Chief Executive, Cyber Monitoring Centre.

Request a complimentary invitation here using the code COMPLIMENTARY. Attendance is limited, and all requests are subject to approval.

China’s cyberspying targets Western defense industry, Dutch intel chief says.

China’s cyber-espionage capabilities are now as sophisticated as the U.S.’s and are increasingly targeting Western defense industries, said the head of Dutch military intelligence.

Growing threat: Dutch Vice Adm. Peter Reesink said China is largely interested in gaining access to technologies from Western militaries and arms producers, and also in spotting vulnerabilities. He made the comments after his agency, known in Dutch as MIVD, released an annual report on Tuesday that said Beijing poses a growing threat to Europe alongside Russia and that the two countries’ increasing cooperation compounds the danger.

U.S., Iran Delay Talks in High-Stakes Game of Chicken

Vice President JD Vance paused plans to travel to Pakistan for negotiations with Iran on Tuesday after a last-minute move by Tehran to withhold its delegation left the talks in limbo and planes waiting on tarmacs for hours.

Mediators said Iran’s top leaders had told them earlier that their negotiating team would travel to Islamabad on Tuesday. Then, with the clock ticking toward Trump’s cease-fire deadline, Iran reversed course.

President Trump said in a social-media post that he would maintain the blockade and extend the cease-fire, which was set to expire Wednesday, as long as talks continue.

• U.S. Blocks Iraq’s Dollar Shipments to Squeeze Its Iran-Backed Militias
• Saudi Arabia and Iraq Are Caught in a Hidden War Within the War
• Iran Is Becoming a Talking Point on Earnings Calls. What Executives Are Saying.

• The Gates Foundation is cutting up to 500 jobs, or roughly 20% of its staff, over the next several years, and the philanthropic giant has also opened an external review of engagement with the late Jeffrey Epstein.
   
• Drought conditions in many of the nation’s growing regions are adding to the stresses of U.S. farmers and raising concerns that they could drive food prices even higher.
   
• Hawaii’s largest utility warns residential customers of a 20% to 30% jump in electric bills, with Alaska also expecting higher costs. U.S. crude prices are up over 30% since the end of February, affecting Hawaii and Alaska, which rely heavily on petroleum for power.
   
• Steve Jobs will forever be credited with inventing the iPhone. Tim Cook used it to build an empire. Yet Cook leaves the company in a potentially precarious position, trailing in artificial intelligence, which is revolutionizing the tech sector while Apple watches from the sidelines.
   
• Confidence among German investors this month sank to its weakest level in more than three years, as firms were shaken by the spike in energy prices from the conflict in the Middle East.
   
• Canada’s chief U.S. trade negotiator said her mandate is to preserve the key elements of the existing North American trade treaty, with no intention to significantly revise or rewrite the pact’s terms.

• Rep. Sheila Cherfilus-McCormick (D., Fla.) resigned from the House in the face of allegations she stole millions of dollars in federal funds, the third lawmaker to quit in recent days rather than face a likely expulsion vote.
   
• An investigation into whether government officials engaged in a conspiracy to undermine President Trump is advancing under newly installed acting Attorney General Todd Blanche.
   
• More than 100 former NASA astronauts are trading the flight deck for the political arena, launching a nonpartisan nonprofit that will advocate for constitutional limits and bringing back civic responsibility.
   
• Federal officials allege a visa-fraud scheme in Louisiana involved law enforcement manufacturing false crime reports. The scheme netted officers $5,000 per “victim” and helped hundreds of foreign nationals secure U visas.
   
• A string of perceived snubs, missed connections and canceled meetings have rocked the relationship between gun makers Beretta and Sturm Ruger.