In the past year, the compliance process of the prediction market platform Polymarket has become one of the most closely watched cases in the interaction between the global crypto market and regulation. From initially exiting the U.S. market due to regulatory violations to regaining regulatory approval and attracting investments from large traditional financial institutions, Polymarket's transformation has not only changed its own fate but also set a direction for the future of the prediction market industry.
Polymarket was initially penalized by U.S. regulators for offering unregistered event-based derivatives trading and was required to restrict access for U.S. users. This incident forced the platform to reassess its business structure and became the starting point for its subsequent compliance transformation.
In 2025, Polymarket began to push for compliance on a large scale. The most important step was acquiring an institution with derivatives exchange and clearing qualifications, laying the groundwork for applying for a U.S. compliance license. In the regulatory system, such licenses are equivalent to an "entry permit" into the mainstream financial market, meaning the platform must adhere to stricter risk management, clearing processes, and auditing requirements.
Later that year, Polymarket successfully obtained approval to become a "Designated Contract Market," officially returning to the U.S. market. This status means that its event contract trading is regarded as formal derivatives business, requiring users to access the platform through compliant brokers, with the trading process being strictly regulated.
This series of changes marks Polymarket's transition from a "platform in the crypto gray area" to a "regulated prediction market exchange."
Polymarket's compliance is not a singular market action but occurs against the backdrop of increased global market attention and the power of capital.
As the pricing ability of prediction markets in areas such as political elections, economic events, and technology industry trends gains recognition, traditional financial institutions have begun to pay attention to "event markets" as a new source of data and direction for the derivatives market.
In 2025, Polymarket received significant investment from major traditional exchange operators. This not only provided financial support but also created channels for establishing connections with traditional financial institutions, further pushing its business framework towards standardization and compliance.
The influx of capital not only enhanced Polymarket's market position but also propelled the entire prediction market industry from the margins to the mainstream.
Polymarket's compliance has driven a structural transformation of the entire prediction market ecosystem:
With the emergence of compliant platforms, prediction markets have begun to shift from "speculative entertainment" tools to "financial and data infrastructure," with the probability information they produce being regarded as price signals or decision-making references in certain areas.
In fields such as politics, economic policy, and technological innovation, the data from prediction markets is increasingly viewed by institutions as a form of real-time large-scale "collective intelligence."
Obtaining a compliance license means that the platform must have a strict clearing system, risk control processes, and information disclosure requirements. This poses pressure on decentralized, anonymous prediction markets, and the industry may see significant differentiation in the future:
- Compliant platforms entering the mainstream financial market
- Decentralized platforms retreating to non-regulated markets or focusing on niche user groups
Compliance requirements drive platforms to improve settlement transparency and the fairness of event determination mechanisms, which will enhance market trust in the outcomes of prediction contracts, further promoting institutional participation.
Compliance allows prediction markets to attract a broader range of users, including institutions, enterprises, and financial institutions with clear compliance requirements, thus significantly raising the overall ceiling of the industry.
Although Polymarket's compliance is a milestone in the industry, uncertainties and challenges remain:
Being regulated means significantly increased operational costs, including auditing, data retention, and customer protection mechanisms. This places new pressures on the platform's business model.
Different countries have varying definitions of prediction markets; some may still view them as gambling rather than financial instruments, limiting cross-border business layouts.
Event determination mechanisms and dispute resolution processes remain focal points of external concern, and the platform needs to continuously improve transparency to maintain market trust.
As institutional participation rises, prediction markets may be reshaped into more "financialized" products, weakening their original crypto-native characteristics.
Polymarket's compliance marks the beginning of prediction markets being integrated into the mainstream financial system. In the coming years, prediction markets may play significant roles in the following areas:
Becoming an important source of price signals for financial markets used to predict policies, economic data, technology trends, corporate events, etc.
Developing into a new institutional asset class or type of derivative used to hedge uncertainty or manage strategies.
Serving as the infrastructure for "data as a market," with prediction markets potentially integrated into search engines, media, and investment research systems, providing real-time probability references for public decision-making.
Promoting larger-scale financial and information integration, forming a cyclical system of "marketized information prediction—decision-making—feedback."
Polymarket's compliance is not merely a regulatory event but a structural transformation that spans the crypto market, prediction market, and traditional finance. It demonstrates the potential of event markets as financial tools and opens a new chapter for prediction markets entering the mainstream financial system.
As the regulatory framework continues to clarify and institutional participation deepens, prediction markets may become an important component of global financial and information infrastructure in the future.
Related: Global New Trends in Cryptocurrency Regulation—Focusing on Stablecoin Governance
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