Spend $112 million to acquire a regulated exchange, paving the way for returning to the United States
According to Bloomberg, cryptocurrency prediction market platform Polymarket announced on Monday (July 21) that it had acquired QCEX, a derivatives financial commodity exchange regulated by the U.S. Commodity Futures Trading Commission (CFTC), for $112 million, paving the way for its return to the U.S. market. The acquisition includes QCEX's derivatives financial commodity exchange and clearing agency QC Clearing, allowing Polymarket to obtain a license to operate legally in the United States.
“This acquisition sets the stage for Polymarket to come home and re-enter the U.S. market with a fully regulated and compliant platform, enabling Americans to trade their ideas,” Polymarket founder and CEO Shayne Coplan said in a statement.
QCEX is headquartered in Boca Raton, Florida, and its exchange and clearing agency are regulated by the CFTC. The exchange applied for a CFTC license as early as 2022, but did not receive regulatory approval until July 9 this year.
QCEX founder Sergei Dobrovolskii spent four years obtaining the designated contract market and derivatives clearing organization licenses. He said that combining QCEX's licenses with Polymarket's order flow can "change the way people get and understand information." Coplan emphasized that having a designated contract manufacturer and derivatives clearing organization will provide legal support for Polymarket's operations in the United States.
Federal investigation concluded, regulatory environment becomes friendlier
The timing of the acquisition announcement is critical, just one week after the U.S. Department of Justice and CFTC concluded their investigation into Polymarket. Federal authorities were originally investigating whether Polymarket violated the terms of a settlement agreement reached with U.S. authorities in 2022. At that time, the CFTC accused Polymarket of illegally operating an unregistered derivatives trading platform. As part of the settlement, Polymarket agreed to pay a $1.4 million fine and block U.S. users from using its platform.
Despite the settlement, authorities later began investigating whether the company failed to enforce the restriction. In November, the FBI searched Coplan’s New York home, as Polymarket was processing about $2.6 billion in election season bets. A Polymarket spokesperson told CoinDesk at the time that the raid was “clear political retaliation,” but the company did not elaborate further.
Election season is hot, with transaction volume exceeding $15 billion
Polymarket rose to fame during the 2024 U.S. presidential election, with its betting markets attracting attention for instantly pricing political outcomes. The platform allows users to trade the probability of future events using cryptocurrencies, covering a wide range of industries from elections to sports to geopolitics. According to Token Terminal data, the prediction platform has had a trading volume of more than $15 billion in the past year.
Image source: Token Terminal Polymarket’s trading volume in the past year exceeded $15 billion
Despite facing skepticism from some polling experts and academics, Polymarket correctly predicted former President Biden’s early exit from the presidential race and accurately predicted Trump’s White House victory months ago. The platform set a monthly trading volume record of $2.6 billion in November last year and $1.1 billion in June. In the first half of this year, Polymarket processed about $6 billion in trading volume.
Earlier, (Crypto City) reported that Polymarket is seeking to raise $200 million at a $1 billion valuation, moving towards unicorn status. The crypto gambling platform has attracted thousands of bettors to bet on exchange-traded fund (ETF) approval and future prices of crypto assets. Polymarket also established a partnership with Musk's social media platform X in June. X chose Polymarket as its official prediction platform and launched a tool for real-time analysis of market-making news.
Further reading
The US election raises the volume! Polymarket is reportedly raising 200 million yuan, and its valuation will become a unicorn?
Musk strikes again! X platform forms alliance with Polymarket to expand crypto prediction market
Facing competitive challenges, preparing to reopen the US market
Polymarket will face challenges from several well-known competitors when it returns to the U.S. market. Cryptocurrency exchange Crypto.com launched its prediction platform in the U.S. in May, while Kalshi has partnered with retail investment platform Robinhood to offer a range of prediction market contracts. At the end of June, both Kalshi and Polymarket announced new fundraising plans: Kalshi raised $185 million at a $2 billion valuation, while Polymarket raised $200 million at a $1 billion valuation.
Polymarket said it will work with regulators to align existing markets with compliance rulesets before opening U.S. account registration. The company did not provide a specific launch date, but said the integration of QCEX technology and clearing functions is underway. Once launched, U.S. users will make margin and settlement payments through QC Clearing, bringing forecast contracts into the same protection system as commodity futures.
While prediction markets are seen by some critics as a tool to tap into the “wisdom of the crowds” and give people a glimpse into the future, they are sometimes opposed by gambling organizations and sports leagues. Polymarket has also occasionally faced controversy over its market resolution methods, including a recent $237 million dispute over whether Ukrainian President Volodymyr Zelensky would wear a suit by July.
"Polymarket returns! Spends a lot of money to acquire QCEX derivatives exchange and return to the US market" This article was first published in "Crypto City"
