Polymarket Finds Path Back To US Following Offshore Move

Crypto-based predictions marketplace Polymarket, has secured a deal to return to the US market shortly after federal regulators concluded their investigation into the company. 

The New York-based platform, known for enabling users to wager on various political and social outcomes such as the past US presidential election, has acquired QCX, a lesser-known derivatives exchange and clearinghouse, which will facilitate its legal re-entry into the US market.

Polymarket’s US Re-Entry

This acquisition comes on the heels of Polymarket’s rising popularity during the 2024 US presidential election, where users placed substantial bets on outcomes, particularly regarding President Donald Trump’s potential return to office. 

Earlier this month, both the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) informed Polymarket that they had closed their probes into the company. 

These investigations focused on whether Polymarket had allowed US-based traders to access its platform, despite a settlement with the CFTC in 2022 that required the company to block such access due to its unregistered status.

This development reflects a notable shift in US regulatory attitudes towards digital asset firms, particularly as the current administration appears more open to crypto-related initiatives compared to the previous Biden-era restrictions.

Shifting Regulatory Landscape

Polymarket gained significant public attention during the 2024 presidential race between Donald Trump and Kamala Harris, with advertising and promotional materials widespread at the Republican National Convention and throughout New York City. 

Polymarket’s acquisition of QCX for $112 million aligns with this trend, as the exchange received Commodity Futures Trading Commission licensing approval in July, following its application in 2022.

However, as Polymarket prepares to re-establish its presence in the US market, it faces increasing competition from other platforms like Crypto.com and Kalshi, both of which are registered with the CFTC and have begun offering their own betting contracts. 

Previously, the Biden administration had sought to limit the growth of political and sports-themed betting on derivatives exchanges, but the Trump administration has signaled a more favorable outlook toward these products.

Bloomberg asserts that the approval of QCX’s license by the CFTC raises questions about whether the regulator was aware of Polymarket’s impending acquisition at the time. Notably, once a license is granted, the CFTC does not have the authority to intervene in subsequent business deals.

Polymarket’s strategic maneuvering comes at a crucial time, as Brian Quintenz, a former Republican CFTC commissioner and head of policy at Andreessen Horowitz’s digital asset division, has been nominated to lead the agency. 

Quintenz’s nomination is set to be voted on by the Senate Agriculture Committee, with the White House advocating for swift confirmation before the August recess.

Featured image from DALL-E, chart from TradingView.com