The United States Commodity Futures Trading Commission has announced that it closely monitors Polymarket and other offshore crypto betting platforms that provide derivatives contracts to US consumers.
In a Jul. 17 discussion at the Georgetown Psaros Center for Financial Markets and Policy, CFTC Chair Rostin Behnam stated, “We are monitoring any offshore activity that is exposing US customers, and we are committed to ensuring that it is conducted legally and ethically.”
Behnam stated that enforcement actions will ensue if an entity’s “footprint” in the United States is substantial enough and it fails to register the derivatives contracts it provides.
“If anyone, Polymarket or otherwise, conducts themselves in a way that breaks the law we will use our civil enforcement authority to make sure that conduct stops.”
The popularity of blockchain-based prediction markets has been the subject of intense scrutiny recently, as it coincided with punters placing bets on the forthcoming 2024 presidential election.
In January 2022, Behnam referenced Polymarket’s $1.4 million settlement with the CFTC for offering over 900 event-based binary options event markets without obtaining registration.
Nevertheless, the CFTC suffered a partial loss in a recent litigation it filed against blockchain prediction platform Kalshi.
The court determined that the CFTC had “exceeded its statutory authority” by directing the US-based entity to suspend its election markets.
The court determined that the CFTC was not authorized to conduct a public interest evaluation of Kalshi’s presidential election markets, despite the CFTC’s assertion that they were causing harm to public interests.
Nevertheless, Kalshi’s election markets were again suspended on Sept. 12, a week later, following the issuance of a stay order by an appeals court. This order will remain in effect until further notice.
It followed a letter from five US Senators and three House representatives on Jul. 5, which urged the CFTC to prohibit presidential election wagering.
Polymarket’s “Presidential Election Winner 2024″ market has had over $930 million in bets made, while the “Popular Vote Winner 2024” market has placed $208 million in bets.
