Polymarket Set to Resume Operations in the U.S.
Polymarket, the cryptocurrency-based prediction market, is gearing up to resume operations for users located in the United States after nearly four years of inactivity following a ban by the Commodity Futures Trading Commission (CFTC). Regulatory documents indicate that its relaunch could happen as soon as tomorrow.
Acquisition and Licensing
This development follows Polymarket’s acquisition of QCX LLC, which has since been rebranded as Polymarket US, for a substantial $112 million. This strategic acquisition provided Polymarket with a Designated Contract Market (DCM) license, enabling it to self-certify its own event contracts, a crucial step in regaining access to the U.S. market.
After obtaining the DCM license, Polymarket awaited a crucial no-action letter from the CFTC, clarifying that the commission would not pursue enforcement actions regarding earlier alleged violations of swap data reporting and recordkeeping rules. When the letter was received in early September, Polymarket’s CEO, Shayne Coplan, expressed that this marked a significant milestone, allowing the company to “go live in the USA.”
Market Dynamics and Competition
Polymarket gained attention during the lead-up to the 2024 elections, where users accurately predicted President Donald Trump’s reelection. Since then, the prediction market sector has experienced explosive growth, with both Polymarket and its biggest competitor, Kalshi, generating hundreds of millions in trading volume weekly. Recently, Kalshi has gained a larger share of the market, benefiting from its established standing in the U.S. due to a similar DCM license.
Future Plans and Regulatory Challenges
With the newly acquired DCM license, Polymarket aims to attract U.S. users by offering regulated and self-certified markets. The self-certification process allows firms regulated by the CFTC to function efficiently. When a DCM holder presents a new market for approval, the CFTC has just one business day to raise any objections. If no objections are made, the market can be listed immediately.
Polymarket’s recent filings included plans for contracts related to sports events and election outcomes, though they have stated that the markets would not be available for users until at least October 2, 2025. As the company prepares for its relaunch, Polymarket has not commented on its strategy but has indicated a strong desire to innovate within the changing regulatory framework of cryptocurrency and decentralized finance (DeFi).
Regulatory Support for DeFi
During a recent panel hosted by the SEC and the CFTC, Coplan stressed the importance of regulatory support for DeFi, suggesting that innovators in the blockchain space might have a better grasp of how to create smart contracts that ensure investor safety than traditional regulators. He emphasized that this would challenge companies in the sector to devise new solutions that align with both technological potential and the principles of conventional financial regulations.
