Polymarket Tightens KYC Rules as Bot Trading and Sanctions Risks Grow

Key Insights:

• Polymarket tightened KYC checks as regulators examine restricted market access methods.
• Bots, Telegram tools, and indirect routing reportedly bypass some Polymarket restrictions.
• Prediction markets and perpetual futures platforms continue to converge across crypto trading.

Polymarket is strengthening its identity verification requirements as regulators and surveillance firms look into how users access restricted prediction markets.

The crypto platform now faces concern over sanctions violations, geographic restrictions, and regulated trading activity linked to blocked jurisdictions. According to reports reviewed by The Information, some users still reach restricted markets through bots, indirect routing systems, and Telegram-based coordination tools.

Polymarket Expands Compliance Controls Across Restricted Markets

Polymarket already blocks order placement in several jurisdictions through its public geoblock system. The restricted list includes the United States, Russia, France, Germany, Iran, the United Kingdom, and the Netherlands.

Polymarket introduces KYC rules | Source: X

Additional regional limits apply in Ontario and occupied Ukrainian territories. Poland, Singapore, Taiwan, and Thailand currently operate under close-only restrictions.

The company’s developer documentation states these controls support sanctions compliance, anti-money laundering requirements, and Know Your Customer obligations. The same documents warn developers that orders from blocked regions face automatic rejection.

Reports indicate that some users continue bypassing restrictions through automated trading bots and indirect front-end access tools. Developers are said to use Telegram channels to control market access and trading flow. These options raised concerns beyond geofencing and into sanctions execution issues.

Polymarket also tied certain trading advantages to verified identities. The platform stated that traders who complete KYC or KYB forms can access direct colocation services within its main server region. That setup provides lower latency for verified participants and signals deeper identity integration inside the trading infrastructure.

Prediction Markets and Perpetual Trading Continue to Merge

Polymarket’s compliance expansion arrives while prediction markets and perpetual futures platforms continue to overlap. On April 21, Polymarket announced plans to launch perpetual contracts covering assets including Bitcoin, Nvidia stock, and gold. Two weeks later, Hyperliquid activated HIP-4 outcome contracts on mainnet.

Hyperliquid later expanded HIP-4 by giving validators authority over publication, listing, and settlement for off-chain event markets. The update also introduced macroeconomic event markets into the validator-controlled framework.

Both systems now target directional trading demand using different structures. Prediction markets use binary pricing models, whereas perpetual deals offer users leveraged, continuous exposure. Yet, despite the differences, both approaches enable traders to forecast outcomes and hedge positions against volatility caused by events.

Industry data showed that global crypto perpetual futures volume reached $61.7 trillion in 2025, up 29% year-over-year. Hyperliquid recorded around 70% of the on-chain perpetual futures market share at one stage. Platform revenue and fees reportedly exceeded $800 million during the same period.

Polymarket Faces Growing Pressure Over Market Structure and Access

Polymarket’s legal challenges also expanded outside the United States. Spain recently moved to block Polymarket and Kalshi over allegations involving unlicensed gambling operations, missing identity checks, and inadequate age-verification systems.

Meanwhile, a Ninth Circuit panel rejected arguments claiming federal derivatives law automatically protects prediction markets from state gambling enforcement actions. The decision added further legal uncertainty around jurisdictional oversight.

Institutional firms also strengthened their activity across the prediction market. ICE reportedly considered investing up to $2 billion in Polymarket while sending event-driven market data to institutional clients.

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