Kalshi, Polymarket Tighten Rules to Curb Insider Trading

• Polymarket mentioned on March 23 that it has upgraded its governing document over its decentralised platform as well as its CFTC-regulated US exchange.
• Polymarket leverages multi-layered surveillance over its DeFi and U.S. platforms, amalgamating on-chain transparency and third-party monitoring to recognise breaches. 

Prediction market platforms Kalshi and Polymarket have planned to launch new rules to curb insider trading and market manipulation as regulatory pressure from Capitol Hill boosts. 

The March 23 blog post includes the statement of Kalshi, which mentions that it has rolled out new screening tools to block potential candidates from trading on their own elections, widening current restrictions that so far apply to elected officials. 

The platform is also executing a new policy aiming at sports-aimed markets, leveraging screening lists advanced with integrity overlooking company IC360 to prevent athletes, coaches, referees, and other insiders from trading on events they are involved in. 

While activities like these are so far restricted, Kalshi mentioned enforcement has widely been reactive, needing scrutiny after trades were placed. Kalshi also featured a prominent feature embedded directly into its trading interface, permitting users to report suspicious activity more swiftly. 

Kalshi’s enforcement and legal counsel, Bobby DeNault, mentioned these rules have been in advancement for months to “proactively address” guidance from the Commodity Futures Trading Commission and a congressional proposal to avoid insider trading. 

Polymarket’s Statement 

At the same time, Polymarket mentioned on March 23 that it has upgraded its governing document over its decentralised platform as well as its CFTC-regulated U.S. exchange, rolling out clearer rules surrounding insider trading and enforcement. 

To be specific, Polymarket highlighted three main categories of restricted conduct: trading on stolen confidential information, trading on illegal tips, and trading by individuals who can directly impact the result of an event. 

It also widened limitations on wider forums of market abuse, comprising spoofing, wash trading, and front-running. As per the statement of March 23, Polymarket leverages multi-layered surveillance over its DeFi and U.S. platforms, amalgamating on-chain transparency and third-party monitoring to recognise breaches. 

The updates show a wider industry push to line up more closely with traditional financial market standards, as policymakers raised concerns that prediction markets, specifically those associated with politics and sports, could be vulnerable to manipulation. 

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