As the 2024 US presidential race heats up, a up-to-date area of political betting has emerged in the cryptocurrency world, with platforms like Polymarket, Kalshi and PredictIt seeing a surge in election betting, even as US regulators begin to crack down on the activity.
The heart of this trend is Polymarket, decentralized finance A DeFi platform that allows users to place bets on everything from election winners to the possibility of revealing the identity of aliens.
Crypto betting craze at Polymarket
According to a recent Bloomberg report reportThe amount of open bets on Polymarket related to the US election results has increased by more than 500% in recent months, approaching the $1 billion mark.
The augment in activity was due in part to “high-profile events,” including President Joe Biden’s withdrawal from the race and assassination attempt about former President Donald Trump.
The augment is especially striking given that Polymarket says it will exclude U.S.-based users from 2022 as part of a settlement with the Commodity Futures Trading Commission (CFTC). Yet the reality on the ground seems to be very different. Interviews with American Polymarket Users reveal that the platform’s system blocking American traders can be easily bypassed by using virtual private networks (VPNs).
In addition, social media is reportedly filled with instructions on how to access the platform from the United States. Bloomberg reports that some traders have openly discussed their Polymarket activities on social media, undeterred by the platform’s stated limitations.
Regulators warn of ‘integrity risk’
According to the report, the developments are raising grave concerns among US regulators, who are increasingly vocal about the need to take decisive action. election related bets.
CFTC Enforcement Director Ian McGinley touted the Polymarket settlement as proof that “all derivatives markets must operate legally, regardless of technology or legal structure.” But legal experts say the CFTC’s guidance on how DeFi platforms can effectively block U.S. users was insufficient.
“Coupled with the lack of regulation, DeFi protocols currently have little guidance on how to effectively comply with regulations,” said Elizabeth Davis, a partner at Davis Wright Tremaine and former CFTC chief enforcement counsel.
Cryptocurrency champions like former president Donald Trump have already provided Polymarket with odds on his likelihood of returning to the White House, and the platform’s data indicates he has a 55% chance of winning.
But CFTC Chairman Rostin Behnam warned that these election-related contracts “ultimately commodify and erode the integrity of the uniquely American experience of participating in a democratic electoral process.”
At the time of writing, the total cryptocurrency market capitalization is $2.17 trillion. Bitcoin, on the other hand, is trading at $63,800, down more than 1% in 24 hours.
Featured image from DALL-E, chart from TradingView.com
