The US Commodity Futures Trading Commission (CFTC) said it will not pursue enforcement against two entities tied to prediction platform Polymarket.
In a Wednesday notice, the CFTC said it had issued a no-action letter “regarding swap data reporting and recordkeeping regulations for event contracts” with QCX LLC and QC Clearing LLC.
“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 […],” said the regulator.
The action essentially allows Polymarket to offer event contracts without reporting the data required under US financial regulations, providing temporary relief from enforcement while not exempting the companies from regulatory compliance.
Polymarket reported acquiring QCEX in July for $112 million, which included the CFTC-licensed derivatives exchange and clearinghouse, giving it a greater foothold in US markets.
According to the request for no-action relief in July, QCX said the event contracts at issue are still “required to be fully collateralized” and “no market participant will clear QCEX Contracts through a third party clearing member.”
This is a developing story, and further information will be added as it becomes available.
