Polymarket is blocked again, is innovation and regulation in crypto projects an eternal dilemma?

Author: 1912212.eth, Foresight News

The prediction market platform Polymarket has entered a tumultuous autumn following the highlights of the U.S. elections.

On January 12, Polymarket was officially defined as a gambling website in Singapore and was blocked. Users attempting to access the Polymarket website in Singapore are prompted with a message stating, "This website is an illegal gambling site hosted by an unlicensed gambling service provider, and users may face fines of up to $10,000 or up to 6 months in prison."

This is not the first time Polymarket has faced restrictions. In November of last year, a French whale who bet on Trump's victory and made over $40 million in profit drew widespread attention, leading the French National Gambling Authority (ANJ) to launch a compliance investigation into the platform and suspend access for domestic users.

According to government regulations, operating any new gambling market must be authorized in advance by the French National Gambling Authority.

Frequent Policy Restrictions and the Ambiguous "Borders and Boundaries"

Polymarket is a prediction market platform based on blockchain technology, fully utilizing decentralized technology to allow users to place bets on various events and processes. Polymarket is one of the few applications in the crypto space that has a network effect. With the arrival of its own highlights in 2024, the U.S. elections have played a crucial role in enhancing its visibility and influence.

In October 2024, Polymarket's trading volume reached $2.28 billion, and in November, it set a new record of $2.577 billion. Although it saw a significant drop in December, its trading volume still reached $1.7 billion. Additionally, the number of active trading users on Polymarket in December last year was 309,228, a historical high; the number of new accounts reached 231,556.

In comparison, Polymarket's trading volume in January 2024 was just over $51 million, with only 8,261 new accounts created that month.

Polymarket provides a transparent and open market prediction platform. Its prediction market accuracy often surpasses that of traditional media and even so-called experts, making it highly favored in the data market, with some media and data platforms frequently citing its prediction data.

While the data shows impressive performance, regulatory scrutiny follows closely behind.

Prediction markets share many similarities with traditional gambling, primarily relying on users to place bets on the outcomes of future events and distributing rewards based on betting rules. However, the innovation of prediction markets lies in their independence from physical operators, relying more on blockchain technology for automated management.

Currently, many countries have differing views on the legality of prediction markets. Some regions see it as a legitimate innovation, while others believe it blurs the boundaries between gambling and compliant investment.

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

The blocking or restriction of user access to Polymarket in Singapore makes it another jurisdiction, following the U.S., France, and Taiwan, that limits access.

As of now, Polymarket has not made any response.

Ongoing Controversies

Recently, Polymarket has faced controversy due to users speculating on California wildfires.

Against the backdrop of wildfires causing multiple deaths and evacuations of hundreds of thousands, users placed indifferent bets on the disaster's progression, with some prediction pools reaching as high as $100,000. This act of "gambling" on public disasters has sparked strong moral objections, with many users criticizing its gambling content as lacking boundaries and being pathological. In response, Polymarket added a brief disclaimer, claiming it utilizes collective intelligence to create accurate and objective event predictions. However, if you truly encounter a natural disaster, the credibility of the prediction market is certainly questionable.

Some experts believe that this situation may impose higher regulatory demands on prediction markets, requiring platforms to more clearly explain the boundaries of betting content.

Prior to this, its founder Shayne Coplan was raided by the FBI on suspicion of market manipulation, as the U.S. Department of Justice (DOJ) was investigating Polymarket for allegedly violating the agreement made with the Commodity Futures Trading Commission (CFTC) in 2022 to "prevent U.S. users from accessing" the platform while still accepting trades from U.S. users.

Conclusion

Although Polymarket has developed rapidly, it still faces significant issues and troubles regarding legality and compliance. Questions about the reasonableness and legality of betting on sensitive events, as well as potential market manipulation, are urgent issues that need to be addressed and resolved. Perhaps Polymarket should consider slowing down and refining its operations to ensure a more sustainable future.