Polymarket Enhances Regulatory Framework
In an effort to bolster the integrity of its operations, Polymarket has announced significant enhancements to its regulatory framework aimed at preventing insider trading and market manipulation across both its decentralized finance platform and its CFTC-regulated exchange in the United States. This overhaul includes new surveillance measures, oversight from the National Futures Association (NFA), and established channels for whistleblowers to report any suspicious activities.
Neal Kumar, the Chief Legal Officer at Polymarket, emphasized the importance of transparency in market operations, stating, “Markets thrive on clarity. Our newly published integrity rules clarify what is prohibited, outline our enforcement measures, and detail how to report unauthorized activity.”
Prohibited Insider Trading Practices
The revised regulations specify three main categories of prohibited insider trading practices:
- Trading on information that is confidential and has been unlawfully acquired.
- Using illegal insider tips.
- Making trades when in a position of authority that could influence the outcome of the event.
Furthermore, the rules ban a range of deceptive practices such as spoofing, wash trading, fictitious transactions, self-dealing, and any attempts to manipulate the market.
Regulatory Measures and Surveillance
On the regulatory front, Polymarket’s U.S. exchange will implement a comprehensive surveillance system that relies on partnerships with leading trade surveillance firms, real-time monitoring via a dedicated control desk, and a Regulatory Services Agreement with the NFA, which will enable investigations and potential sanctions against violators. Penalties may include suspension, termination of accounts, monetary fines, or referrals to law enforcement agencies.
On the decentralized side, users can report potential misconduct through Polymarket’s Discord or via email, while those using the U.S exchange have the option to file confidential complaints directly.
Shifts in the Regulatory Landscape
This move towards tighter regulation coincides with a significant shift in the U.S. regulatory landscape, where the CFTC has claimed exclusive control over prediction-market derivatives, seeking to clearly define how event contracts should be governed under the Commodity Exchange Act.
In a notable development, Polymarket received an amended order from the CFTC in late 2025, which facilitates intermediary access through futures commission merchants and aligns the platform with rigorous self-regulatory obligations akin to a Designated Contract Market.
Market Activity and Future Outlook
This regulatory tightening comes at an opportune time for prediction markets, which are experiencing unprecedented activity. February 2026 saw a monthly trading volume of approximately $18.6 billion across major platforms like Kalshi and Polymarket, reaching record highs, with more than $8 billion traded in just the early days of March.
As prediction markets increasingly serve as key information resources for media organizations, sports leagues, and financial firms, experts believe that exchanges with strong surveillance capabilities and transparent integrity rules will be best positioned to attract significant trading activity. Polymarket’s founder, Shayne Coplan, reaffirmed the company’s commitment to offering innovative ways for fans to engage with sports while ensuring responsible growth on a global scale in line with their integrity initiatives.
