- ▸ Bloomberg reports Polymarket is exploring a path to bring its global exchange back to U.S. users, including a structure that could combine its offshore platform with its U.S. regulatory licenses.
- ▸ Regulatory fit remains a key question, as some contract types offered on Polymarket’s offshore platform could face restrictions under U.S. law, particularly those tied to war, national security, and other sensitive events.
- ▸ Polymarket has ramped up market integrity efforts and may benefit from a shifting CFTC stance.
Polymarket, one of the leading prediction market platforms worldwide, has been in discussions with the Commodity Futures Trading Commission to reopen U.S. customer access to its primary offshore exchange, according to a new report from Bloomberg.
Polymarket’s U.S. exit stemmed from a 2022 enforcement action by the CFTC, which found the company had been operating an unregistered derivatives market offering event contracts classified as swaps. As part of the settlement, Polymarket agreed to wind down those markets and cease offering them, effectively preventing it from serving U.S. users unless it registered and brought its platform into compliance.
Last summer, Polymarket announced it had acquired QCEX, a CFTC-approved exchange and clearinghouse. With those approvals, late last year, the company soft-launched its new U.S. app, separate from its international exchange. The rollout has been slow, with users gradually onboarded from an ongoing waitlist, and market selection was for several months limited to sports contracts, though the app recently began adding political and economic markets.
Polymarket’s U.S. exchange recorded nearly $226 million in trading volume in March, while the international platform exceeded $10 billion in monthly volume for the first time in March.
Citing anonymous sources familiar with the matter, Bloomberg reported that Polymarket has in recent weeks been discussing with the CFTC a potential structure that would combine its global platform’s core exchange operations and blockchain infrastructure with its U.S. licenses, allowing domestic trading to run entirely on the on-chain platform.
Scrutiny over contract types could complicate approval
One potential challenge for Polymarket’s efforts to bring its main platform onshore is the types of contracts it offers. The company’s offshore exchange has hosted a range of markets that have grabbed headlines and drawn scrutiny from U.S. lawmakers, particularly those tied to military conflict, geopolitical outcomes, and other sensitive real-world events. Those concerns have been echoed in recent congressional outreach, including a letter urging the CFTC to take action against offshore platforms offering contracts that may fall outside permissible derivatives activity.
Examples of controversial contracts on Polymarket have included markets on the timing of potential U.S. military action, escalation scenarios in global conflicts, and contracts tied to extreme geopolitical outcomes, including nuclear weapon use. Critics argue that such markets raise concerns around manipulation, national security, and whether they can be listed under U.S. commodities law.
The platform has faced backlash over specific incidents. Earlier this month, Polymarket removed a market tied to the fate of a downed U.S. pilot in Iran after it was flagged publicly, including by Rep. Seth Moulton, who criticized the listing on social media, calling it “disgusting.”
Polymarket responded directly, saying the market “should not have been posted” and attributed its listing to a failure in its internal review process before removing it.
Under the Commodity Exchange Act, the CFTC has authority to prohibit contracts it determines are contrary to the public interest, including those related to unlawful activity, gaming, and, notably, war or military conflict.
That authority, codified in CFTC rules implementing the statute, has been central to debates over prediction markets in recent years. Contracts tied to military action or similar events could fall within those restricted categories, raising questions about whether some of the products currently offered offshore could be listed on a U.S.-regulated exchange without modification.
Polymarket emphasizes market integrity amid push for CFTC approval
Concerns around insider trading and market manipulation have also become a growing focus in the prediction market debate in recent months, drawing increased attention from lawmakers and regulators. Several congressional proposals have raised the risk that individuals with access to non-public information could use prediction markets to profit on events tied to government activity or geopolitical developments.
Those concerns moved from hypothetical to concrete in April, when federal authorities charged U.S. Army Special Forces soldier Gannon Ken Van Dyke with using classified information to generate more than $400,000 in profits on Polymarket’s international exchange tied to a covert operation involving Venezuelan leader Nicolás Maduro. Prosecutors alleged Van Dyke used nonpublic intelligence about the mission to place a series of trades ahead of the operation’s public announcement.
Polymarket has pointed to the case as evidence of its monitoring efforts, saying it flagged the suspicious activity and referred it to authorities. The company has positioned the episode as a demonstration of its ability to detect and respond to potential abuse.
At the same time, the company has taken steps to formalize its approach to market oversight. Polymarket recently introduced updated integrity rules and monitoring tools aimed at identifying suspicious trading behavior and strengthening enforcement against manipulation and insider activity.
The shift marks a more proactive stance compared to its earlier approach. In an interview last November with 60 Minutes, Polymarket CEO Shayne Coplan suggested that traders having an informational edge was “a good thing.” While acknowledging the need to define ethical boundaries, Coplan said traders using inside information was an “inevitability” and that “there’s a lot of benefits from it.”
But Polymarket’s more recent actions suggest a greater emphasis on aligning with traditional U.S. market oversight standards. That evolution could be significant as the company looks to bring its primary platform under CFTC oversight. Demonstrating the ability to monitor trading, prevent abuse, and cooperate with enforcement authorities is a core requirement for regulated exchanges, and could become a key factor in any potential approval process.
Fragmented liquidity and costs underscore challenges of split platforms
Polymarket’s current structure may be a factor driving its reported discussions with U.S. regulators. The company operates two distinct platforms: the U.S.-regulated exchange with limited availability and volume and the much larger offshore marketplace where the majority of trading activity takes place.
That split fragments liquidity across separate order books, reducing market depth and potentially impacting pricing efficiency. Consolidating trading onto a single platform could deepen liquidity, improve execution, and make the exchange more competitive with rivals like Kalshi that operate through a single, unified exchange.
Maintaining two separate platforms also introduces operational complexity. As gaming and sports betting attorney and industry advisor Peter Hammon noted in a recent LinkedIn post, running parallel exchanges requires dual, redundant efforts across compliance, legal, and technology functions, while also limiting how partnerships and user acquisition strategies can be applied across the platforms.
“Eliminating those additional costs, simplifying day-to-day operations, and maximizing liquidity are well worth the price of increased oversight,” Hammon wrote.
Those dynamics could help explain why Polymarket is exploring a structure that would unify its offshore platform with its U.S. regulatory framework, even if doing so requires greater regulatory scrutiny and transparency, including, as Hammond noted, “unmasking the corporate structure of the Panamanian entity” that operates Polymarket’s global platform.
CFTC shift opens door but questions remain
The U.S. regulatory backdrop for prediction markets has begun to shift. In February, the CFTC withdrew a proposed rule governing event contracts and rescinded related staff guidance on sports markets, reversing a Biden-era effort that had signaled tighter oversight of the sector.
CFTC chairman Michael Selig has repeatedly criticized the prior administration’s approach, arguing it relied on “regulation by enforcement” rather than developing clear guardrails for emerging products. In a January Washington Post op-ed, Selig said that approach subjected the emerging markets to “legacy rules that could not fit the product, but could fit the prosecutor.” He has also signaled a desire to bring more prediction market activity under U.S. oversight, saying in April congressional testimony that offshore liquidity should be brought “back here into the United States under comprehensive regulation.”
That shift could create an opening for Polymarket to reengage with U.S. regulators. Bloomberg noted that lifting restrictions on U.S. users would require a formal commission vote. With no other commissioners currently appointed, Selig is the lone member of the commission, meaning any such decision would rest solely with him.
Whether Selig would approve lifting Polymarket’s U.S. restrictions remains unclear. The decision may still hinge on how much of the platform’s current model can be adapted to meet U.S. regulatory requirements.
