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Polymarket, the biggest crypto prediction market, has closed French accounts after the French National Gambling Authority, ANJ, is putting more and more pressure on them. This is a big moment for Polymarket as they are facing regulatory issues in many jurisdictions. Reports say users are finding a way to bypass the ban by using VPNs, a big hole in the enforcement of this ban.
Regulatory Pressure Forces Action
Polymarket closed French accounts after ANJ launched a big investigation into Polymarket. The investigation was triggered after a French user placed bets of more than $45 million on Donald Trump to win the US presidential election. Those bets were against French anti-betting laws.
I’m response, Polymarket showed a pop-up to French users trying to access the site that said, “Trading is not available to U.S. persons, persons located in the United States, France or persons located in restricted jurisdictions.”
A source at ANJ said: “Even if Polymarket uses cryptocurrencies, it’s still a betting activity and this is not allowed in France.” Apparently, the French government will go global to clamp down on the crypto-powered prediction market to prevent further breaches.
VPNs Continue to Bypass Restrictions
Despite the ban, Polymarket’s restrictions do not seem foolproof. A journalist from The Big Whale was able to access the site without restrictions from France using a VPN and even placed a bet. This raises big questions about the platform’s ability to comply with local laws.
Based on reports, VPN bypassing is not new to Polymarket. In fact, the platform had already faced similar issues in the US when it settled with the CFTC in 2022 and agreed to block access to its site from the country. However, most traders found a way to access it undetected, overcoming all the hurdles in enforcing the law in a decentralized crypto world.
A Falling Giant Amid Controversy
Polymarket has reportedly been a controversial figure in the prediction market space for a long time. It boomed during the recent US presidential election. Its highest daily volume was $367 million on November 6. But its volume has been declining since then and went as low as $31.9 million in recent weeks.
The platform is also accused of wash trading by an executive of its competitor Kalshi. The allegations added to its legal issues in many jurisdictions. US officials reportedly launched an investigation into Polymarket and recently raided the house of its CEO. The investigation is about whether the company allowed banned users to use its service and if insider trading was done during its peak.
Balancing Popularity and Regulation
Polymarket’s meteoric rise during the US election made it a household name in the crypto betting space. But with great success comes great scrutiny. French authorities said it’s operating in a gray area of the law and US regulators have raised concerns if it’s compliant with local laws.
However, it didn’t stop the crypto-powered prediction market from trying to engage with regulators. “We’ve paused new trades in France while we continue to talk to stakeholders in the country about our platform and prediction markets in general,” a company spokesperson told news sources.
Conclusion
Polymarket’s move to block French users is the latest chapter in its game of cat and mouse with regulators. It may calm the authorities for now, but the fact that users on a crypto-based decentralized platform can still access the site using a VPN shows that the jurisdictional ban is not foolproof.
It’s a tough spot for Polymarket to balance growing user demand and being legal. How it will do that will be the future of crypto prediction markets.
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