Ethereum co-founder Vitalik Buterin has stepped up to defend Polymarket. It is a decentralized prediction market and it faces scrutiny from the US Commodities and Futures Trading Commission (CFTC). Buterin described platforms like Polymarket as “social epistemic tools,” highlighting their value in reflecting public opinion and forecasting potential events. His support comes at a time when prediction markets are under increasing regulatory pressure.Â
Polymarket’s Growing PopularityÂ
Despite regulatory challenges, Polymarket has seen a significant rise in activity. Interest in the platform has surged, particularly around predictions related to the upcoming US elections. As a result, Polymarket’s monthly trading volume hit over $390 million in August. That’s up from $387 million in July, according to Dune Analytics. The number of active traders also reached a new high, with 53,981 users in August, compared to 44,523 the previous month.Â
CFTC’s Crackdown on Prediction MarketsÂ
The CFTC recently proposed restrictions on platforms like Polymarket, arguing that such markets could be harmful to the public interest. This is especially regarding election-related betting. US Senator Elizabeth Warren supported these concerns; she is advocating for a ban on prediction markets tied to US elections due to the risks associated with gambling.Â
Crypto Community PushbackÂ
Buterin isn’t alone in his defense of Polymarket. Other major players in the crypto space, like Gemini and Coinbase, have also voiced opposition to the CFTC’s proposed regulations. Gemini co-founder Cameron Winklevoss argued that decentralized prediction markets offer valuable insights into future events and serve a genuine public purpose. Meanwhile, Coinbase’s Chief Legal Officer, Paul Grewal, raised concerns over the vague definitions used in the proposed rules.Â
Controversy Over DefinitionÂ
Opinion Labs, a market analysis firm, pointed out that the categorization of Polymarket as a gambling platform might be misleading. The firm noted that Polymarket isn’t entirely decentralized or permissionless and that some so-called prediction markets operate more like traditional casinos.Â
New Partnerships and Future ProspectsÂ
As Polymarket continues to navigate regulatory challenges, it has partnered with AI company Perplexity. They want to enhance user experience with advanced news summarization features. Â
