Key Highlights
- U.S. CFTC gives conditional regulatory approval to Polymarket
- This approval will open the door for the leading cryptocurrency-based prediction market to reenter the U.S.
- This approval comes amid the regulatory shift under U.S. President Donald Trump
On September 3, the U.S. Commodity Futures Trading Commission (CFTC) disclosed conditional regulatory approval to the leading cryptocurrency-based prediction market platform Polymarket.
.@CFTC Staff Issues No-Action Letter Regarding Event Contracts: https://t.co/uglKQN5EX4
— CFTC (@CFTC) September 3, 2025
CFTC officials stated in an official release, “The Commodity Futures Trading Commission’s Division of Market Oversight and the Division of Clearing and Risk today announced they have taken a no-action position regarding swap data reporting and recordkeeping regulations for event contracts in response to a request from QCX LLC, a designated contract market, and QC Clearing LLC, a derivatives clearing organization.”
“The divisions will not recommend the CFTC initiate an enforcement action against either entity or their participants for failure to comply with certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions and variable payout contract transactions executed on or subject to the rules of QCX LLC and cleared through QC Clearing LLC, subject to the terms of the no-action letter,” stated in a press release.
Background of Polymarket vs CFTC
This announcement will provide relief to Polymarket and end its long-standing regulatory uncertainty.
This approval is the first stance of the federal regulatory, where they are clearly endorsing a platform that uses cryptocurrency for the prediction of real-world events. Under U.S. President Donald Trump’s administration, cryptocurrency enthusiasts are seeing a favorable regulatory shift.
In 2022, the CFTC levied a $1.4 million fine against Polymarket for operating an unregistered facility and off-exchange transactions, which is a clear violation of the Commodity Exchange Act.
In this enforcement action, the agency compelled Polymarket to pause U.S.-based users and relocate its operations to the Cayman Islands.
However, to secure the commission’s endorsement, Polymarket agreed to follow strict rules for its operations. These include implementing Know Your Customer (KYC) and Anti-Money Laundering (AML) verification procedures for all U.S.-based clients.
This limits leverage on certain contracts and utilizes CFTC-approved oracle services for immutable and verifiable event resolution. The company will also be subject to quarterly reporting mandates and independent annual audits.
The regulatory green light is granted for a provisional two-year pilot period. This period is subject to continuous monitoring and possible revocation for non-compliance.
Some experts believe that the CFTC has not merely approved a single entity; it has constructed a potential template for the entire DeFi sector to engage with regulators.
The study from the University of Iowa has previously revealed that prediction markets can outperform traditional forecasting methods by major margins in accuracy.
By bringing Polymarket into a regulated fold, the CFTC may unlock substantial institutional capital currently hesitant to participate in unregulated markets.
However, some critics have voiced concerns that legitimizing such markets could inadvertently promote speculative gambling on sensitive matters, including elections and geopolitical crises.
While Polymarket has committed to prohibiting contracts pertaining to unlawful activities and to collaborating with independent fact-checking organizations, regulatory scrutiny is expected to remain intense.
Furthermore, the federal approval does not preempt state-level gaming laws, potentially complicating access for residents in jurisdictions like New York and California.
For Polymarket, the conditional approval represents a transformative victory. The company expects a substantial surge in user activity and trading volume with the reopening of the U.S. market.
In an official statement, CEO Shayne Coplan affirmed, “Polymarket has been given the green light to go live in the USA by the @CFTC. Credit to the Commission and Staff for their impressive work. This process has been accomplished in record timing. Stay tuned.”
As the nation approaches the 2026 midterm elections, the role of a regulated Polymarket in testing public sentiment will be closely watched.
