The U.S. Commodity Futures Trading Commission (CFTC) issued a no-action letter, allowing Polymarket to relaunch its crypto-based prediction market operations in the United States after a three-year hiatus.
This approval marks a significant regulatory milestone for the decentralized finance (DeFi) sector, enabling Polymarket to operate under the regulatory framework of QCX, a CFTC-licensed derivatives exchange acquired by Polymarket for $112 million in July 2025. The no-action letter exempts Polymarket from certain swap data reporting and recordkeeping requirements, facilitating its return to the U.S. market without facing enforcement actions for non-compliance with these specific obligations.
This development follows Polymarket’s earlier challenges, including a $1.4 million fine and a cease-and-desist order from the CFTC in January 2022 for operating unregistered event-based binary options contracts. The platform had been barred from offering services to U.S. customers since then.
The recent approval reflects a broader shift in U.S. regulatory attitudes toward crypto and prediction markets, with the CFTC and Securities and Exchange Commission (SEC) showing increased openness to digital asset trading. Polymarket’s CEO, Shayne Coplan, praised the CFTC for its swift action, noting the process was completed in “record timing.”
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The relaunch is bolstered by strategic moves, including an investment from 1789 Capital, a venture fund backed by Donald Trump Jr., who also joined Polymarket as an advisor. This approval positions Polymarket to compete with platforms like Kalshi and capitalize on growing interest in prediction markets for political, economic, and cultural events, potentially reshaping the DeFi and fintech landscapes in the U.S.
However, the no-action relief is conditional and does not exempt Polymarket from other regulatory requirements, such as anti-money laundering (AML) or know-your-customer (KYC) obligations, and state-level regulations may pose additional challenges.
The no-action letter signals a more permissive regulatory stance toward decentralized finance (DeFi) platforms, potentially paving the way for other crypto-based prediction markets to gain approval. This could encourage innovation in the DeFi sector, as platforms see a clearer path to compliance within the U.S.
Polymarket’s return to the U.S. market, facilitated by its acquisition of the CFTC-licensed QCX exchange, allows it to tap into a large user base interested in prediction markets for events like elections, economic indicators, and cultural outcomes. This could drive significant user growth and trading volume, positioning Polymarket as a leader in the sector.
The approval intensifies competition with other prediction market platforms like Kalshi, which also recently received CFTC approval for similar activities. This could lead to innovation, better user experiences, and potentially lower costs for participants, but it may also spark pricing wars or market saturation.
Prediction markets, often seen as more accurate than polls for forecasting events like elections, could gain mainstream traction in the U.S. With Polymarket’s high-profile backing, including from figures like Donald Trump Jr., these platforms might influence public discourse or be leveraged for political and economic insights, raising concerns about manipulation or bias.
While the no-action letter exempts Polymarket from certain reporting requirements, it must still navigate other federal regulations (e.g., AML/KYC) and varying state-level rules. This could limit its operational flexibility or increase compliance costs, potentially affecting smaller players in the market differently.
The CFTC’s decision reflects growing acceptance of crypto-based financial products, which could boost investor confidence and mainstream adoption of cryptocurrencies. It may also encourage other regulators, like the SEC, to clarify their stance on similar platforms, reducing uncertainty in the crypto space.
As a decentralized platform built on Polygon, Polymarket’s U.S. approval could set a benchmark for other jurisdictions, influencing global regulatory approaches to prediction markets and DeFi. However, it may also prompt stricter oversight in regions wary of crypto’s unregulated nature.
The conditional nature of the no-action relief means Polymarket must adhere strictly to CFTC terms. Any misstep could lead to regulatory backlash, as seen in its 2022 fine, potentially undermining confidence in the platform or the broader DeFi sector.
Overall, this move strengthens Polymarket’s position, fosters DeFi innovation, and enhances the role of prediction markets in the U.S., but it also underscores the complex regulatory landscape that crypto platforms must navigate.