With the intensifying 2024 US presidential election, a novel avenue for political betting has emerged in the cryptocurrency realm. Platforms like Polymarket, Kalshi, and PredictIt are witnessing a surge in bets on election results despite regulatory actions in the US.
Polymarket stands at the center of this phenomenon, a decentralized finance (DeFi) platform enabling users to gamble on various events from election victors to the likelihood of extraterrestrial disclosure.
Growing Trend of Crypto Betting on Polymarket
An article by Bloomberg revealed a remarkable surge of over 500% in the volume of active bets on Polymarket concerning US election outcomes recently, nearing the $1 billion milestone.
This spike in engagement can be attributed, in part, to significant occurrences like President Joe Biden stepping back from the race and the attempt on the life of former President Donald Trump.
Despite Polymarket claiming to have barred US participants since 2022 due to a settlement with the Commodity Futures Trading Commission (CFTC), the ground reality tells a different story. Accounts of American Polymarket users indicate that the platform’s mechanisms to block US traders can be effortlessly bypassed using virtual private networks (VPNs).
Moreover, there are online guides detailing how US residents can access the platform, even discussions on social media platforms where users openly share their Polymarket activities, unfazed by the platform’s restrictions.
Regulatory Warnings About ‘Integrity Risks’
Concerns are mounting among US authorities regarding these developments, with calls for a crackdown on election-related betting gaining traction. The CFTC’s Enforcement Director Ian McGinley has emphasized the necessity for all derivative markets, regardless of their technological or legal framework, to adhere to the law.
Nevertheless, legal experts argue that the CFTC’s directives on how decentralized finance platforms can effectively block US users have been inadequate. Elizabeth Davis, a former CFTC chief trial attorney for enforcement and current partner at Davis Wright Tremaine, highlighted the challenges faced by DeFi protocols in ensuring compliance.
Despite endorsements from figures like former President Donald Trump on Polymarket’s odds of a potential return to the presidency, CFTC Chairman Rostin Behnam cautioned against these election-based contracts, citing concerns about their impact on the democratic electoral process’s integrity.
Currently, the total cryptocurrency market cap stands at $2.17 trillion, with Bitcoin trading at $63,800, experiencing a slight dip in the last 24 hours.
Image credits: DALL-E, TradingView.com chart.
