In early May 2026, the same batch of capital provided vastly different answers along two compliant paths: on one side, Boston-based AI programming company Blitzy announced the completion of approximately $200 million in Series C funding, led by Northzone, with Battery Ventures, Jump Capital, Morgan Creek Digital, and PSG participating, pushing its latest valuation to about $1.4 billion and directly placing this startup on the "new unicorn" list; on the other side, Polymarket, which had been out of the U.S. market for about four years, was still struggling to make progress on its license path akin to "going public at home"—it attempted to acquire an exchange that had already obtained a U.S. derivatives and futures license to bypass the long process of applying from scratch, but was clearly lagging behind competitor Kalshi. Ironically, Justin Hertzberg, who was appointed by Polymarket to lead U.S. operations, was widely referred to in media and on social media as a "nominal manager," casting further doubt on the compliance narrative within the already complex CFTC regulatory environment. At the same time, institutions such as Jump Capital and Morgan Creek Digital, deeply invested in the crypto space, were placing large amounts of new money on AI programming tools with shorter and more predictable compliance paths. The main thread of this article unfolds between these two tracks: as prediction market platforms vie for licensing amidst intense financial regulation, while AI companies mainly face corporate law and data security red lines, capital preferences, regulatory games, and industry boundaries are rewriting their destinies at different speeds.

Polymarket's Gamble on Returning to the U.S. License

For Polymarket, the real gamble began after its "retreat." About four years ago, under U.S. regulatory pressure, the platform chose to stop providing services to U.S. users and moved its core business abroad. Since then, it has not completely abandoned the U.S. market, but has identified what seems to be a shortcut but is actually a high-difficulty path through exploring for a few years: acquiring an exchange that has already obtained a U.S. derivatives and futures license. Because in the United States, providing specific prediction contracts is essentially classified under futures, options, or other derivatives, subject to regulation by the CFTC and other agencies, a relevant license is a prerequisite for all business designs—whoever holds the license can legally discuss "prediction markets." Polymarket reached a settlement with the CFTC around 2022, although specific terms were not disclosed, this regulatory record serves as a shadow, reminding all parties involved: it is not a "blank slate," and every attempt to re-enter must be re-examined under the footnote of existing compliance disputes.

The problem is that this gamble on licensing has not progressed smoothly. Polymarket sought to shorten the timeline and evade the lengthy process of applying for a license from scratch through a "shell purchase," but as of early May 2026, its positioning in the U.S. market is clearly lagging behind competitor Kalshi, which has made progress along the licensing path. More subtly, in order to promote the return of its U.S. business, Polymarket appointed Justin Hertzberg as its head, yet he has been widely labeled as a "nominal manager" by media and social media. This personnel arrangement weakens external confidence in its execution ability and also makes it easier for regulatory agencies to suspect: whether the project party truly regards U.S. compliance as the main battlefield, rather than just using a name and an acquisition promise to hedge against future uncertainties. Under the same set of intense regulatory frameworks, the gap between Kalshi and Polymarket is continuously widened by such details.

Compliance Path Does Not Equal a Pass: Execution Challenges Under Regulatory Shadows

In U.S. regulatory practice, "acquiring a licensed exchange" has never been a pass that can be straightforwardly used to break through. As long as there is a change in control, regulatory agencies will pull the entire process out to go through it again: whether the new controlling party has anti-money laundering capabilities, whether the risk management system operates independently, whether the governance structure can genuinely constrain the business team—these all require through qualification review. For Polymarket, even if the target exchange itself has already obtained derivatives and futures licenses, as long as the regulators find it unclear who is making the final decisions, they have reason to slow down the approval pace and focus more energy on penetrating the actual controllers and verifying the compliance team's boundaries of responsibility.

The issue is that when the public generally views Justin Hertzberg as a "nominal manager," this personnel arrangement can easily be interpreted in regulatory perspectives as a formalized management structure or even a potential "shadow controller" model. Regulatory agencies are consistently cautious about such arrangements, meaning that communication costs, additional inquiries, and document exchanges will be added to the already complex acquisition process. Furthermore, Polymarket’s insufficient management input in U.S. operations and limited execution team configuration further lack enough "contact persons" to digest these regulatory requirements. The result is that progress on U.S. operations stagnates, and the acquisition of a license does not translate into visible market advances. Polymarket struggles to meet the incremental demand of the local prediction market. Liquidity and active users are more likely to be locked in by competitors like Kalshi with clearer compliance paths. Under the same regulatory framework, those who can fill in the execution details have greater opportunities to turn regulatory thresholds into real competitive moats.

On the Other Side, Blitzy: The Compliance Comfort Zone of an AI Unicorn

In contrast to Polymarket, which is still in a licensing battle, in early May 2026, AI programming company Blitzy quietly completed approximately $200 million in Series C funding in Boston, with a post-financing valuation of about $1.4 billion, directly placing it among the latest unicorns in the region. This round was led by Northzone, with Battery Ventures, Jump Capital, Morgan Creek Digital, and PSG participating. According to a single source, when combining previous rounds, Blitzy’s total funding has exceeded $204 million (this figure still awaits further public validation). In the current tight capital environment, such a scale and valuation transaction is itself a ticket stamped with the words "in demand."

The capital's willingness to issue checks to Blitzy at this moment largely stems from the "predictability" of its compliance path. As an AI programming infrastructure project, Blitzy's direct regulatory focus lies in general corporate law, data protection, and potentially applicable AI safety frameworks, rather than derivatives or prediction market licenses; it needs to comply with rules regarding privacy, data use, and algorithm risks, rather than the CFTC’s financial product definitions and license approvals. Moreover, with a former Nvidia architect Sid Pardeshi on the founding team, this technical endorsement not only facilitates explaining the "computational power + model" narrative but also positions regulatory communication as "responsible technological innovation." It is also notable that participants like Jump Capital and Morgan Creek Digital are already deeply invested in crypto but are now placing incremental funds on AI infrastructure within the same capital pool, viewing regulatory uncertainty as a key discount factor for crypto prediction markets, while projects like Blitzy are seen as having lower compliance risks and clearer paths to regulatory approval, creating a "comfort zone" in this round of reallocation. Those able to minimize compliance uncertainties will find it easier to attract funding from that portion of capital most fearful of "landmines."

Reallocation Within the Same Capital Pool: From Crypto Prediction to AI Infrastructure

From the perspective of this round's capital table, the names of Jump Capital and Morgan Creek Digital stand out—these two institutions, which have long been active in the crypto and Web3 domains, were previously viewed as "permanent players" in high-volatility arenas like prediction markets and on-chain trading. Now, within the same capital pool, they are placing new positions on AI infrastructure and developer tools companies like Blitzy. Over the past cycle, they have gradually increased their allocations to AI infrastructure, and this round of approximately $200 million for Blitzy is a concentrated representation of this reallocative trend. With U.S. prediction markets still shrouded in cautious regulation from the CFTC and the shadows of historical compliance records, Polymarket's slow moves towards license acquisition, lagging behind Kalshi, leave its U.S. revenues and user growth filled with uncertainties. This unpredictability is translated into a higher "compliance risk premium" on the investment side, directly weakening the valuation and financing appeal of this sector in the primary market.

In contrast, companies like Blitzy that are currently mainly constrained by general corporate law and data security frameworks do not need to navigate the complex financial licensing system from the very beginning. Their shorter compliance path and more predictable timelines serve as a "safe haven" for institutions that are extremely sensitive to regulations and fearful of "stepping on landmines" near compliance red lines. As Polymarket's pace of returning to the U.S. continues to lag, and its market share is outpaced by Kalshi, the signals of the same batch of funds voting with their feet are further amplified—so long as the regulatory uncertainties of the crypto prediction market are not mitigated, this capital, which could support the next generation of trading platforms, will continue to pile positions in AI infrastructure rather than return to a path where compliance discounts are becoming increasingly hard to hedge with other narratives.

The Way Forward for Prediction Markets: Continue to Play the Regulatory Game or Shift to Global Expansion

Returning to this main thread: Polymarket's return to the U.S. over the past few years has almost bet on a single path—acquiring an exchange that has already obtained a U.S. derivatives and futures license, led by Justin Hertzberg, who has been questioned by outsiders as a "nominal manager," to advance communications with regulatory agencies. However, regulators remain cautious regarding prediction markets and derivatives platforms. The high compliance costs and lengthy approvals have prevented this combined approach from materializing, leading to U.S. operations progressing less than expected, leaving Polymarket behind Kalshi, which is clearly ahead in the licensing path. In this comparison, Polymarket must make a clearer choice between two paths: either accept the reality of "deep localization compliance," pouring resources into U.S. regulatory communications, substantial team investment, and license integration, exchanging it for a locally operating market that is subject to strict boundary constraints, or recognize that the pace in the U.S. is difficult to manage, shifting the focus towards globalization based on cross-border service structures, KYC, and geographic limitations, creating a compliance hybrid model where the U.S. is an exception rather than the center. At the same time, Blitzy, in a shorter and more predictable regulatory path in the AI programming sector, rapidly solidified its unicorn position with approximately $200 million in Series C funding and around $1.4 billion valuation. Behind it, funds like Jump Capital and Morgan Creek Digital, which were originally deeply invested in crypto, are reallocating their positions. This capital differentiation preference between crypto prediction markets and AI infrastructure implies that future prediction markets will either be forced to grow into highly localized, clearly defined "regional franchise" models, or move towards a global network characterized by cross-border compliance trade-offs. How to choose between these two paths will determine who can secure the next round of meaningful long-term capital support.

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