Regulators Greenlight Polymarket's U.S. Return After 3-Year Ban

The Commodity Futures Trading Commission (CFTC) has issued a no-action letter to QCX LLC, a subsidiary of Polymarket, allowing the blockchain-based prediction market to relaunch in the U.S. market. The letter permits QCX to operate event contracts without facing enforcement actions related to specific swap reporting and recordkeeping obligations, provided certain terms are met [1]. This decision follows a CFTC investigation in 2022, during which Polymarket was fined $1.4 million and required to block U.S. users for operating an unregistered derivatives trading platform [2]. The CFTC’s move reflects a broader shift in regulatory attitudes toward event-based derivatives and blockchain-based platforms [3].

Polymarket’s path to re-entry was significantly aided by its acquisition of QCX in July 2025 for $112 million, which provided the company access to an already CFTC-licensed derivatives exchange and clearinghouse [1]. The platform now intends to leverage QCX’s regulatory framework to offer U.S. users access to its prediction markets. The decision has been widely welcomed within the crypto community, with CEO Shayne Coplan calling the CFTC’s actions “unprecedented” and praising the speed of the process [1].

The platform gained global attention during the 2024 U.S. presidential election, with its markets predicting Donald Trump’s victory more accurately than many traditional polls. The election cycle generated nearly $3.7 billion in trading volume on one of its largest markets [1]. In recent months, Polymarket has seen a resurgence in activity, with over 11,500 new markets launched in July alone, representing a 44% increase month-over-month [1]. Despite the growth in market creation, overall trading volume has stabilized at around $1 billion per month, a marked decline from the $2.6 billion peak seen in November 2024 [3].

The regulatory environment for prediction markets appears to be evolving. The CFTC’s decision mirrors previous exemptions for binary options and aligns with a more permissive federal approach toward crypto and event-based derivatives [4]. Acting CFTC Chair Caroline Pham has acknowledged past enforcement actions created legal uncertainty, while incoming CFTC leader Brian Quintenz has defended the legitimacy of event contracts as risk management tools [1]. This regulatory leniency has also benefited other platforms, such as Kalshi, which has faced its own legal challenges but continues to expand its U.S. presence [4].

Polymarket’s reentry is bolstered by high-profile strategic investments and partnerships. Donald Trump Jr. joined the platform’s advisory board in August 2025 following a strategic investment from his firm, 1789 Capital [1]. Additionally, Elon Musk’s X platform announced a collaboration with Polymarket in June, further increasing its visibility and user base [1]. These developments position Polymarket to compete more directly with Kalshi, another major player in the prediction market space [2].

The CFTC’s no-action letter is narrowly tailored, applying only to fully collateralized event contracts and excluding external clearing members [2]. While this limitation reflects regulatory caution, it also aligns with precedent set for other markets, ensuring that Polymarket can operate under a clear legal framework. The platform’s return to the U.S. marks a significant milestone in the evolution of crypto-backed prediction markets and highlights the potential for blockchain technology to reshape traditional financial instruments.

Source:

[1] Polymarket wins CFTC approval to re-enter U.S. after 3-year ban (https://ambcrypto.com/polymarket-wins-cftc-approval-to-re-enter-u-s-after-3-year-ban/)

[2] Polymarket hits all-time high for new markets created as platform eyes US return (https://www.theblock.co/post/369682/polymarket-hits-all-time-high-for-new-markets-created-as-platform-eyes-us-return)

[3] Polymarket Gets OK as Prediction Markets Challenge Sportsbooks (https://www.pymnts.com/markets/2025/polymarket-gets-us-green-light-as-prediction-markets-challenge-sportsbooks/)

[4] Polymarket Set to Revolutionize Prediction Markets in the U.S. (https://www.onesafe.io/blog/polymarket-cftc-approval-prediction-markets)