Polymarket is blocked again, will encryption project innovation and supervision become an eternal problem?

Author: 1912212.eth, Foresight News

The prediction market platform Polymarket has had a troubled life since the highlight of the US election.

On January 12, Polymarket was officially defined as a gambling website and blocked in Singapore. When users log in to the Polymarket official website in Singapore, they will be prompted that "this website is an illegal gambling website hosted by an unlicensed gambling service provider. Users may be fined up to US$10,000 or imprisoned for up to 6 months."

This is not the first time Polymarket has been restricted. In November last year, the news that a French whale made more than $40 million in profit by betting on Trump’s election attracted widespread attention. The French National Gambling Authority (ANJ) imposed restrictions on the platform. Immediately, a gaming compliance investigation was launched and access rights of users in the country were suspended.

According to the government website, operating any new gambling market must obtain prior authorization from the French National Gambling Authority.

Policies are frequently restricted and “borders and boundaries” are

blurred

Polymarket is a prediction market platform based on blockchain technology, which makes full use of decentralized technology and allows users to add to various events and processes. Polymarket is one of the few applications in the cryptosphere that has a circle-expanding effect. Since it ushered in its own highlight moment in 2024, the US election has played a key role in its popularity and influence.

In October 2024, Polymarket's trading volume reached US$2.28 billion, and in November it hit a new high of US$2.577 billion. Although it fell sharply in December, its trading volume reached US$1.7 billion. In addition, the number of active trading users of Polymarket in December last year was 309,228, a record high; the number of new accounts reached 231,556.

For comparison, Polymarket's trading volume in January 2024 was just over $51 million, and the number of new monthly accounts was only 8,261.

Polymarket provides a transparent and open market prediction platform. The accuracy of its prediction market is often ahead of traditional media and even so-called experts in many aspects, and it is therefore favored by the data market. Some media and data platforms often quote its prediction data.

Although the data is impressive, the policy stick is not far behind.

Prediction markets have a lot in common with traditional gambling. The focus is on relying on users to add to the results of future events and allocating rewards through betting regulations. However, the innovation of the prediction market is that it does not need to rely on physical operators, but relies more on blockchain technology for automated management.

But currently, many countries have different views on the legality of prediction markets. Some regions see it as a legitimate innovation, while others see it as blurring the boundaries between gambling and regulated investment.

As early as 2022, Polymarket had reached a settlement with the U.S. Commodity Futures Trading Commission (CFTC), paying US$1.4 million and closing the non-compliant market by January 24.

Singapore blocks or restricts user access to Polymarket, making it another jurisdiction to restrict access, joining the United States, France and Taiwan.

So far, Polymarket has not responded.

Controversy continues

Polymarket recently faced controversy over users speculating on the California wildfires.

In the context of wildfires that have killed many people and evacuated hundreds of thousands of people, users have been betting indifferently on the development of the disaster, with some predicting fund pools as high as $100,000. This kind of "gambling" of public disasters has aroused strong moral doubts, and many users have criticized its gambling content as having no bottom line and being pathological. In response, Polymarket added a brief disclaimer claiming that it uses the wisdom of the crowd to create accurate and objective event predictions. But if you really encounter a natural disaster, the credibility of the prediction market is worthy of a big question mark.

Some experts believe that this time may impose higher requirements on the regulatory operation of the prediction market, requiring the platform to more clearly explain the boundaries of betting content.

Prior to this, its founder Shayne Coplan had also been raided by the FBI on suspicion of market manipulation. The reason was that the US Department of Justice (DOJ) was investigating Polymarket, accusing the platform of violating the 2022 agreement with the Commodity Futures Trading Commission (CFTC). The agreement reached to "block access to US users" still continues to accept transactions from US users.

Conclusion

Although Polymarket has grown rapidly, it still faces considerable problems and troubles surrounding legal compliance. Whether bets on sensitive events are reasonable, legal and compliant, and whether there is financial manipulation in the market are all issues that need to be faced and resolved. Perhaps, if Polymarket slows down appropriately and refines its operations, it will go further.