CFTC Warns Offshore Crypto Betting Platforms, Including Polymarket

The Commodity Futures Trading Commission (CFTC) is closely monitoring offshore crypto betting platforms like Polymarket that offer derivative contracts to U.S. customers, warning of potential enforcement actions for legal violations.

CFTC Chair Rostin Behnam stated on July 17 that the agency is scrutinizing offshore activities to ensure compliance with U.S. laws.

He emphasized that any entity with a significant U.S. presence must register its derivative contracts, or face legal consequences. This enforcement could extend to various financial entities including exchanges and brokers.

Recent months have seen increased scrutiny of blockchain-based prediction markets, particularly as betting on the 2024 presidential election has surged. Polymarket had previously settled with the CFTC in January 2022 for $1.4 million due to unregistered event-based markets.

The CFTC recently faced a setback in a lawsuit against Kalshi, another prediction platform. The court ruled that the CFTC overstepped its authority by demanding Kalshi halt its election markets.

Despite this, Kalshi’s election markets were suspended again on September 12 after an appeals court issued a stay order, following calls from lawmakers for a ban on election betting.