Polymarket increases KYC checks during beta testing as regulators raise concerns over sanctions, insider trading, and restricted market access.
Polymarket is increasing identity verification efforts as regulatory pressure continues growing worldwide. The prediction market platform aims to minimise sanctions risks and potential legal issues. Furthermore, there is a close monitoring of online prediction markets and trading activities related to cryptocurrencies in several countries.
Polymarket Expands Verification Efforts During Beta Testing
According to The Information report, Polymarket began sending some users to verify their identity. The company wants to enhance compliance with financial regulations and sanctions policies. Furthermore, the platform aims to block the use of automated systems and trading bots by restricting users’ access to blocked markets.
Polymarket’s claims of mandatory KYC on its platform were reported. But Polymarket quickly rebutted those allegations after the reports went online. Josh Stevens, Vice President of Engineering at the company, said KYC is only used for a separate beta product.
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The current Polymarket platform will not be subject to any KYC verification, Stevens said. Furthermore, he explained that the new beta product only needs KYC during its testing period. After the beta phase, the company will be eliminating those requirements from the product.
Meanwhile, the U.S. and European regulators are stepping up their investigation of prediction markets. Several investigations centered on insider trading issues related to significant geopolitical events. This has led to increased pressure on platforms such as Polymarket to enhance monitoring systems and compliance protocols.
Some users were reportedly using restricted markets via proxies and automated trading bots. Some developers also allegedly leveraged Telegram features to funnel trading to limited areas.
Polymarket was also under increasing pressure about potential use in sanctioned areas, such as Russia. Authorities are concerned that traders could circumvent restrictions by using VPNs and automated systems.
Regulators Increase Pressure on Prediction Market Platforms
There have been some recent changes in the regulations of prediction market platforms and online betting services in several countries. Internet providers in Spain, Brazil, and Indonesia have been reportedly ordered to block access to certain prediction markets by regulators. Furthermore, some authorities considered these services to be unlicensed gambling operations.
Polymarket is also rolling out more robust market integrity measures to minimise manipulation risks. The company’s objectives include the prevention of wash trading, spoofing and private information trading. Furthermore, these measures could contribute to enhancing transparency and trust on the platform among users and regulators.
Polymarket denied claims that it is adding mandatory KYC to its existing platform. Josh Stevens, Polymarket’s VP of Engineering, said the company is launching a new beta product for a select group of users, with KYC required only during the beta period. He said no KYC is being…
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The platform is reportedly sending accounts with very high trading volumes to be verified for identity. If traders are depositing and withdrawing funds on a frequent basis, they may also be asked for verification. Therefore, Polymarket is looking to detect suspicious transactions before regulators have any further concerns.
Concurrently, the company provides incentives to users who do voluntary KYC and KYB verification. Verified users will get quicker server access and reduced trading latency during peak hours. So, Polymarket is hoping that more traders will opt to go through the verification process.
The company also maintains a separate service called “Polymarket USA” for its U.S. operations, which it continues to separate from. That platform reportedly works through intermediaries regulated by the Commodity Futures Trading Commission. This is because it allows Polymarket to operate with greater caution in the more stringent American financial environment.
In the face of increasing legal pressure around the world, Polymarket continues to be the world’s largest prediction market. But regulators remain on the sanctions front, insider trading issues, and unauthorized market access.
