- The CFTC issued a no-action letter granting temporary relief to Polymarket and its subsidiaries, QCX and QC Clearing.
- The letter allows Polymarket to offer event contracts without complying with certain swap data reporting and recordkeeping regulations.
- Polymarket acquired QCEX for $112 million, expanding its US market presence with a CFTC-licensed derivatives exchange and clearinghouse.
The US Commodity Futures Trading Commission (CFTC) issued a no-action letter on Wednesday, providing temporary relief to Polymarket and its recently acquired entities, QCX LLC and QC Clearing LLC. This letter comes in response to a July request for relief, effectively allowing Polymarket to offer event contracts without being required to report certain data under US financial regulations.
In the notice, the CFTC stated it would not pursue enforcement actions against QCX and QC Clearing for failing to comply with swap data reporting and recordkeeping regulations related to binary options and variable payout contracts. This decision essentially provides a temporary reprieve from enforcement while still holding the entities accountable for regulatory compliance.
Polymarket expands through acquisition of QCEX
This no-action relief follows Polymarket’s acquisition of QCEX in July for $112 million, a deal that brought the CFTC-licensed derivatives exchange and clearinghouse under its control. The acquisition gives Polymarket a stronger foothold in US markets, particularly in the crypto derivatives space.
The request for the no-action letter, filed in July, detailed that QCX maintains full collateralization for the event contracts and that no market participant would clear QCEX contracts through a third-party clearing member.
Regulatory considerations and future compliance
While the no-action letter grants temporary relief, it does not exempt Polymarket or its subsidiaries from future regulatory compliance. The CFTC emphasized that the relief was specific to the swap data reporting and recordkeeping requirements for the event contracts in question, and that the entities must still adhere to other relevant regulations.
The move comes as Polymarket, which specializes in prediction markets and event contracts, navigates the complex landscape of US financial regulation surrounding crypto derivatives. The CFTC’s stance marks a notable development in how the agency is approaching the regulatory treatment of crypto-related financial products.
