Polymarket ban fails: U.S. wallets bet $571M on politics
On-chain data research firm Allium says the Polymarket ban has not stopped U.S.-linked participation in political prediction markets. In the past year, U.S.-linked wallets traded about $571M in Polymarket political contracts, even though Americans were blocked from using the offshore platform directly.
Polymarket ban failure is attributed to U.S.-linked wallets reaching the site via crypto wallets, stablecoins, and location-masking tools. The U.S. became the largest national group in the data, ahead of Hong Kong ($422M). Allium added that it could tag only about 6% of political-market wallets, so the numbers are “directional rather than exact.”
The report also highlights where U.S.-linked demand went. Geopolitics made up 46% of U.S. notional volume versus 36% for Polymarket overall. Election markets were just 16% for U.S.-linked volume (vs 32% across the platform). The biggest U.S.-linked market was a novelty contract about whether Ukrainian President Volodymyr Zelenskyy would wear a suit. Five of the top 12 U.S.-linked markets related to the Iran war.
Americans did not show a clear trading edge: on resolved markets, U.S.-linked wallets backed winning outcomes 81.9% of the time vs 80.3% for everyone else.
Regulatory pressure is intensifying. The Polymarket ban failure comes as the U.S. CFTC investigates Polymarket, including business and social-media practices, while lawmakers have urged action over alleged fake advertising and user-protection issues. Meanwhile, Wisconsin and Michigan actions target prediction-market event contracts (Kalshi, Coinbase, Polymarket), and ESMA has warned Polymarket under EU rules.
For crypto traders, this reinforces that offshore prediction-market demand can persist on-chain despite access restrictions, potentially sustaining volatility around regulatory headlines.
Neutral
This is broadly neutral for the wider crypto market, but it is a negative sentiment signal for prediction-market operators. The key takeaway is that the Polymarket ban has not reduced U.S.-linked demand; it has shifted it to offshore access routes that are still visible on-chain. That can keep Polymarket and similar platforms in regulators’ crosshairs.
In the short term, traders may price in higher headline risk around CFTC actions and state-level court outcomes. Similar regulatory turnarounds have historically caused bursts of volatility in the “adjacent” crypto narrative even when majors (BTC/ETH) remain relatively insulated. If enforcement escalates or platforms restrict access again, sentiment could soften and liquidity could temporarily thin.
In the long term, the fact that performance does not show a clear U.S. edge suggests the market is not necessarily “unfair” in returns, but it does highlight oversight gaps. That pattern often leads to tighter compliance or product redesign rather than immediate disappearance. So the impact is likely to be focused on prediction-market venues, not a broad systemic move for the entire crypto market.