Polymarket and Kalshi updated their rules after the US Senate proposed introducing restrictions on some forecasts.
Crypto prediction markets are tightening oversight of insider trading: Polymarket has broadened its list of prohibited activities, while Kalshi has deployed new insider-detection tools. Concurrently, Polymarket has rolled out a new user acquisition program.
Compliance Policies and Senate Scrutiny
Kalshi announced the deployment of new technological safeguards that preemptively block trading access for politicians, athletes, and other individuals linked to specific political and sports markets. The platform has also streamlined the process for users to report violations.
Polymarket announced updates to its restriction policy, introducing clearer regulations regarding insider trading. The platform outlined three primary categories of prohibited activities: trading based on misappropriated confidential information, trading on insider information, and trading by individuals capable of directly influencing an event's outcome.
Beyond insider trading, the platform's global and US divisions have banned "all forms of fraud and market manipulation, including spoofing, wash trading, and trading involving illiquid assets, alongside self-trading, front-running, misuse of information, attempted manipulation, and disruptive practices that compromise normal market operations."
These updates coincide with the introduction of a US Senate bill aimed at prohibiting prediction markets associated with sporting events or gambling. The proposed legislation covers a broad range of products, including contracts tied to both professional and collegiate sports.
An earlier bill sought to ban prediction market betting related to death, war, and assassinations. This followed a joint US-Israeli strike on Iran that resulted in the death of the Republic's Supreme Leader, Ali Khamenei.
Read other similar materials from our authors:
Trading Volumes and Market Mechanics
Kalshi and Polymarket are the largest cryptocurrency-based prediction markets. According to The Block, February’s monthly trading volume reached approximately $10.44 billion on Kalshi and $7.94 billion on the global Polymarket platform. For the month of March to date, the figures stand at $9.61 billion and $8.14 billion, respectively. Polymarket US (the US-facing service) recorded $263 million in February and has already reached $393 million this month.
Prediction market users wager on event outcomes by purchasing "yes" or "no" tokens. A token's market price reflects the collective probability assessment: for instance, a price of $0.20 indicates a 20% implied probability of the event occurring. Winning tokens yield a $1 payout each, while losing tokens expire worthless. These tokens can be actively traded within the platforms, similar to an exchange, prior to the event's resolution.
On March 24, Polymarket also updated its referral program. The platform now offers users a rebate of up to 30% on trading fees generated by the new clients they onboard. Eligibility for the program requires existing traders to have a minimum cumulative trading volume of $10,000.
