JPMorgan ended its banking relationship with blockchain-based prediction market Polymarket last year, citing regulatory concerns at a time when the sector faced heightened uncertainty. The move comes into sharper focus as the U.S. Department of Justice (DOJ) is now investigating several major banks, including JPMorgan, over allegations of improperly closing customer accounts.
JPMorgan Cut Ties With Polymarket Over Compliance Risks
The Wall Street bank severed links with Polymarket amid concerns about the legal and regulatory status of prediction markets, according to reports. At the time, the industry faced significant scrutiny in the United States, with questions over whether certain event-based markets constitute off-exchange derivatives or fall under gambling prohibitions.
Polymarket operates a blockchain-based platform where users trade on the outcomes of real-world events using stablecoins. The company previously reached a settlement with the U.S. Commodity Futures Trading Commission (CFTC) in 2022 related to offering event contracts without proper registration, a case that underscored the regulatory complexity surrounding the category.
DOJ Probes Banks Over Alleged Improper Account Closures
The DOJ is examining whether large financial institutions, including JPMorgan, improperly closed accounts—a practice often described as “debanking.” Banks typically cite anti-money laundering, sanctions, and consumer protection rules when offboarding higher-risk clients, but regulators have warned that blanket de-risking can harm lawful businesses and consumers.
The outcome of the probe could influence how banks balance compliance obligations with access to financial services, particularly for firms operating in emerging or ambiguously regulated markets such as crypto-based prediction platforms.
Prediction Markets Navigate Ongoing Regulatory Uncertainty
Event-contract and prediction markets continue to face an evolving regulatory landscape in the U.S. The CFTC has taken a cautious stance on certain political and event-based contracts, while platforms have adjusted operations, including restricting U.S. access in some cases, to align with compliance requirements.
Greater clarity from regulators and courts could determine whether mainstream financial institutions re-engage with prediction markets. Until then, banking access is likely to remain a key operational challenge for platforms at the nexus of crypto and financial speculation.