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CFTC Reportedly Investigating Decentralized Platform Polymarket

www.financemagnates.com 25 October 2021 05:00, UTC
Reading time: ~2 m

The Commodity Futures Exchange Commission (CFTC) has opened an investigation against decentralized prediction market Polymarket, according to a Bloomberg report. 

Though officially not confirmed, the agency is reportedly suspecting the violation of regulations with the offering of trading swaps or binary options. It is also investigating if companies like Polymarket need to be registered.

The blockchain company, however, said that it is fully compliant with all United States regulations.

“Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry,” a company spokesperson told the publication.

Rise of Prediction Markets

Polymarkets is a popular prediction market that allows people to wager on real-world events, including politics, sports, governmental policies or anything else. The company utilizes decentralized technology for its services and clears the contracts on the Ethereum blockchain. The platform uses stablecoin USDC for transactions and does not hold any user funds.

The company is currently in talks with investors for another funding round that could make it the next crypto unicorn, raising its valuation to $1 billion, the publication reported.

The regulations of the cryptocurrency market in the US are mostly divided between the CFTC and the securities market watchdog, the SEC. While the SEC oversees most of the capital markets trading and keeps a keen eye on token listings, the CFTC focuses on derivatives contracts.

The action against Polymarket was not the first instance of the CFTC’s worries against the event contracts. Earlier, its inquiries forced cryptocurrency exchange ErisX to shelve its plans of offering futures contracts based on National Football League games.

The SEC earlier said to have been investigating decentralized crypto exchange Uniswap, but the agency did not confirm that yet.

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