Trump Admin Ends Investigations into Polymarket Crypto Prediction Platform

The U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) have officially closed their investigations into Polymarket, a crypto based prediction market platform, marking a significant development for the crypto industry. The probes, which intensified during the final days of the Biden administration, scrutinized whether Polymarket allowed U.S. based users to place bets in violation of a prior regulatory agreement. This resolution according to Bloomberg, comes as the Trump administration signals a more favorable stance toward digital assets, potentially paving the way for Polymarket to re-enter the U.S. market legally.

Polymarket, a New York based platform founded by CEO Shayne Coplan, gained widespread attention during the 2024 U.S. presidential election, with users wagering billions on outcomes. The platform, which operates on the Ethereum scaling network Polygon, allows bets on a wide range of events, from political races to Bitcoin price movements. Its surge in popularity, particularly during the election season, led to trading volumes reaching approximately $2.6 billion in November 2024. However, this success drew regulatory scrutiny, culminating in a dramatic FBI raid on Coplan’s Soho penthouse just days after the election, an action he publicly criticized as politically motivated.

A Shift in Regulatory Landscape

The conclusion of the DOJ and CFTC investigations reflects a broader shift in the U.S. regulatory approach to cryptocurrencies under President Donald Trump’s administration. The probes, initiated in late 2023, examined whether Polymarket continued to accept wagers from U.S. users through virtual private networks (VPNs) or other methods to bypass restrictions. These restrictions stemmed from a 2022 settlement with the CFTC, in which Polymarket paid a $1.4 million fine for operating an unregistered derivatives market and agreed to block U.S. traders. The end of these investigations aligns with what Washington is calling Crypto Week, a period marked by industry-backed regulatory proposals and a record-breaking Bitcoin price surge.

The resolution could open doors for Polymarket to seek formal re-entry into the U.S. market, potentially through CFTC registration as a futures exchange or by acquiring a licensed entity. This development is particularly noteworthy given the Trump administration’s nomination of Brian Quintenz, a former CFTC commissioner and board member of Polymarket’s rival Kalshi, to lead the agency. Quintenz’s appointment suggests a potentially more lenient regulatory environment for prediction markets, which are classified as swaps under CFTC oversight. Polymarket’s recent partnerships, including a collaboration with Elon Musk’s X and xAI to provide event forecasts, further signal its ambition to expand its influence.

Polymarket’s journey has not been without controversy. Critics have raised concerns about the platform’s potential to influence public perception through large bets, with some alleging market manipulation during the 2024 election cycle. Despite these concerns, supporters, including Ethereum co-founder Vitalik Buterin, argue that prediction markets offer a more accurate reflection of public sentiment than traditional polling. The platform’s transparency, enabled by its blockchain based operations, allows researchers to analyze trading activity, though reports of wash trading have sparked debates about its integrity.

The end of the investigations marks a pivotal moment for Polymarket and the broader crypto industry. With significant financial backing from Peter Thiel’s Founders Fund and a growing user base, Polymarket is well-positioned to capitalize on a potentially more favorable regulatory landscape. As the Trump administration prepares to enact industry-friendly policies, the platform’s ability to navigate future regulatory hurdles will be critical to its long-term success in the evolving world of digital assets and prediction markets.