Polymarket in talks with CFTC to return U.S. exchange

Polymarket is negotiating with the U.S. Commodity Futures Trading Commission to return its main prediction-market exchange to the United States. The company aims to resume trading for U.S. customers under a regulatory framework that meets the agency’s requirements.

The firm moved its primary operations offshore after the CFTC in 2022 questioned whether some event-based contracts were derivatives subject to U.S. oversight. Polymarket restricted access for U.S. users at that time.

Polymarket operates an online prediction market where participants buy and sell contracts that pay out based on real-world events, including political contests, economic indicators and sporting results. Many markets on the platform are denominated in crypto.

Current discussions between Polymarket executives and CFTC officials cover how event contracts would be treated under the Commodity Exchange Act. Agency officials are focused on market integrity, surveillance to detect manipulation, customer protections and whether the exchange would need to register as a trading facility supervised by the CFTC.

Polymarket would need to show how it would monitor and restrict access by U.S. persons during any interim period while formal approvals are considered. The company would also have to adopt compliance systems such as trade surveillance, recordkeeping and controls for onboarding and customer identification.

Those requirements differ from the lighter compliance approaches some crypto platforms use while operating offshore. Polymarket’s 2022 retreat reduced direct access for American customers and shifted a portion of trading volume outside the United States.

Restoring the exchange to the U.S. would reconnect domestic users and could increase liquidity on political and event contracts. It would also place the platform under ongoing CFTC supervision and potential enforcement if rules are breached.

The Commodity Futures Trading Commission enforces the Commodity Exchange Act and oversees futures, swaps and certain other derivatives. The agency has increased scrutiny of crypto-based trading platforms when products resemble regulated derivatives; prediction markets can fall under that oversight depending on contract design and how markets are offered to U.S. persons.

Polymarket did not respond to a request for comment. The CFTC did not provide a comment.