Polymarket Eyes KYC as Global Regulation Tightens on Prediction Platforms
Polymarket, a leading prediction market platform, is reportedly exploring mandatory Know Your Customer (KYC) measures as regulatory scrutiny intensifies worldwide. The discussions come as the platform faces bans or access restrictions in over 30 countries, including Spain, Portugal, and New Zealand, for failing to comply with local licensing laws.
According to a report by The Information, Polymarket is weighing identity verification requirements to align with global regulatory expectations. Currently, the platform allows users to operate under pseudonyms, raising concerns about illegal gambling, insider trading, and the use of the platform for sanctioned activities. Notably, Polymarket has already geoblocked jurisdictions like Iran, Russia, and North Korea, which are under international sanctions.
Insider Trading and Legal Risks on Prediction Markets
Polymarket has been at the center of several high-profile controversies tied to insider trading and questionable market activity. For instance, a U.S. soldier reportedly netted $400,000 by betting on the capture of Venezuelan President Nicolás Maduro, allegedly using classified information. Just this week, a separate $1.2 million insider trading case involving Polymarket came to light, reinforcing concerns about transparency and oversight in event-based trading.
These incidents have caught the attention of U.S. lawmakers, who have launched a probe into Polymarket and similar platforms over insider trading risks. The scrutiny coincides with legislative efforts to expand federal oversight of prediction markets. The proposed Prediction Market Act of 2026, introduced in April, aims to address insider trading, restrict event categories like terrorism, and formalize Commodity Futures Trading Commission (CFTC) jurisdiction over event contracts.
Global Pushback: Bans and Licensing Hurdles
Regulatory challenges extend far beyond the United States. On May 26, Spain officially blocked Polymarket for operating without a gambling license, joining countries like India, New Zealand, and Portugal in barring the platform. Spain’s move underscores a fragmented international regulatory environment, where platforms face conflicting compliance obligations across jurisdictions.
In the European Union, prediction markets lack a unified regulatory framework akin to the Markets in Crypto-Assets Regulation (MiCA) for digital assets. Instead, oversight falls to national authorities, creating a patchwork of rules that force platforms like Polymarket to navigate bans, geoblocking, or licensing hurdles. This regulatory uncertainty has pushed Polymarket to seek formal approval from the CFTC to reenter the U.S. market, following its $1.4 million fine in 2022 for unregistered activity.
Trump and the CFTC: Federal Oversight in Focus
Adding a political dimension to the debate, U.S. President Donald Trump recently voiced his support for the CFTC’s exclusive authority over prediction markets. Trump's public backing aligns with the stance of CFTC Chair Michael Selig, who has defended federal preeminence against state-level restrictions. Notably, Trump’s son, Donald Trump Jr., serves as a strategic adviser to both Polymarket and competitor Kalshi, raising questions about potential conflicts of interest in shaping industry regulation.
What’s Next for Prediction Markets?
Polymarket’s potential adoption of KYC signals a broader shift in the prediction market sector toward greater compliance and oversight. However, the platform’s future remains uncertain amid ongoing court battles, legislative proposals, and international enforcement actions. With insider trading cases mounting and an expanding list of countries blocking access, the next steps for Polymarket—and the prediction market industry at large—will likely hinge on the outcome of federal regulatory initiatives and international cooperation.
Traders and stakeholders are watching closely as regulatory clarity unfolds, particularly in the U.S., where pending legislation and CFTC actions could set the tone for global compliance standards.