CFTC Declines Enforcement Action Against Polymarket Entities
The US Commodity Futures Trading Commission (CFTC) has announced that it will not take enforcement action against two entities affiliated with prediction platform Polymarket.
In a notice issued on Wednesday, the CFTC confirmed that it has provided a no-action letter “regarding swap data reporting and recordkeeping regulations for event contracts” concerning QCX LLC and QC Clearing LLC.
According to the regulator, “The divisions will not recommend the CFTC initiate an enforcement action against either entity or their participants for failure to comply with certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions and variable payout contract transactions.”
This decision effectively permits Polymarket to offer event contracts without the obligation to report the data mandated by US financial regulations, granting temporary relief from enforcement while still requiring the companies to adhere to regulatory compliance.
In July, Polymarket announced its acquisition of QCEX for $112 million, which included the CFTC-licensed derivatives exchange and clearinghouse, thus enhancing its presence in US markets.
As stated in the request for no-action relief made in July, QCX indicated that the event contracts in question are still “required to be fully collateralized” and that “no market participant will clear QCEX Contracts through a third-party clearing member.”
This is an ongoing story, and additional information will be provided as it becomes available.
