The Regulatory Battle for Tomorrow's News: Can Polymarket and Limitless Survive the CFTC?

Prediction markets are rapidly becoming the real-time pulse of public sentiment and future outcomes, letting users “trade the news” before it happens. In crypto, this has collided with on-chain innovation: decentralized protocols now allow anyone to take positions on elections, sports, macro events, and even breaking stories. Yet in the United States, event markets sit squarely in the Commodity Futures Trading Commission (CFTC)’s jurisdictional gray zone. The central question for 2025 is simple: can platforms like Polymarket — and newer entrants such as Limitless — operate sustainably in the shadow of the CFTC?

This piece unpacks the regulatory landscape, recent court and agency moves, and what these protocols must change to survive.

Why the CFTC Cares About Event Markets

Under the Commodity Exchange Act (CEA), many event contracts are treated as derivatives — including “binary options” and swaps — regardless of whether they’re listed on a centralized exchange or issued via smart contracts. The CFTC has long warned that off-exchange binary options and unregistered event contracts risk violating the CEA. Its foundational thinking on the topic goes back to a 2010 concept release addressing how “event contracts” (from elections to weather) intersect commodities and gaming law, a useful primer for today’s crypto-native platforms. See the agency’s discussion in the CFTC’s paper on event contracts for more context at the end of this paragraph: the CFTC’s concept release on event contracts.

The upshot: in the U.S., event markets generally need to be listed on a registered Designated Contract Market (DCM) or a Swap Execution Facility (SEF), and clearing and surveillance obligations may apply. Anything that looks like an off-exchange binary option offered to retail users is likely to draw enforcement.

Polymarket’s Compliance History and 2024–2025 Context

Polymarket, the leading on-chain prediction protocol, settled with the CFTC in January 2022 over offering unregistered event contracts. The order required winding down certain markets and paying a civil monetary penalty. You can read the CFTC’s order here: CFTC Order against Blockratize Inc. (Polymarket). For a summary of the settlement and why it mattered, see coverage at CoinDesk: CFTC fines Polymarket $1.4M.

Since then, Polymarket has grown globally, particularly around high-profile political markets and macro events. The platform’s rise has paralleled a broader revival of public interest in prediction markets amid real-time social media and crypto-native stablecoin rails. Mainstream financial media has chronicled that resurgence throughout the 2024–2025 election cycle, with persistent questions about how U.S. regulators will respond to on-chain access.

Kalshi, Courts, and a Possible Path Forward

One regulated path exists: registering and listing event contracts through a U.S. DCM. Kalshi has pursued exactly that route — applying to list “congressional control” markets and challenging the CFTC’s disapproval in court. In late 2024, a U.S. appeals court opened the door for Kalshi’s political event contracts, vacating the CFTC’s prior block and remanding. That decision didn’t resolve every policy issue, but it did show that blanket opposition to election markets isn’t legally foregone. For details, see Reuters’ report: U.S. appeals court opens door for political betting on Kalshi.

Inside the agency, commissioners are publicly split. Commissioner Caroline D. Pham, for example, published a statement highlighting the need for clear rules and expressing concern that sweeping prohibitions may overshoot, especially as markets evolve. Her perspective underscores a growing recognition that event contracts — when properly supervised — can provide informational benefits without undermining market integrity. Read her statement here: Statement of Commissioner Caroline D. Pham on the Order Disapproving Kalshi’s Congressional Control Contracts.

Where Does “Limitless” Fit?

Beyond Polymarket, new protocols and front-ends are experimenting with on-chain event markets under various models: fully decentralized smart contracts, geofenced UIs, and “points” or off-chain wagers that mirror outcomes. “Limitless” represents this wave of next-gen prediction platforms pushing toward global, always-on news markets with crypto-native settlement.

For any such protocol, the CFTC’s posture matters even if the team avoids U.S. customers. The agency can assert jurisdiction where U.S. persons are involved, intermediaries are located domestically, or solicitation targets the U.S. market. Moreover, exchanges, wallets, analytics providers, and liquidity partners can face risk if they facilitate access to unregistered derivatives. In other words, technical decentralization helps, but distribution, marketing, and custody models still matter.

The Compliance Playbook: How On-Chain Markets Might Survive

To operate sustainably, event-market protocols should consider:

• Registration or affiliation with a regulated venue. Listing contracts via a registered DCM/SEF (or partnering with one) remains the most conservative path in the U.S., as Kalshi’s trajectory illustrates. See CoinDesk’s coverage of the CFTC’s initial block for context: CFTC blocks Kalshi’s political event contracts.

• Geofencing and access controls. Preventing U.S. persons from accessing unregistered markets is table stakes, including robust IP checks, KYC/AML for compliant products, and transparent terms of use.

• Non-custodial architecture. Minimizing custody risk with smart contracts and wallets where users control keys — while ensuring oracles, settlement, and dispute resolution are transparent — reduces enforcement exposure related to customer funds.

• Market design that avoids “gaming” concerns. The CFTC’s event-contract framework explicitly grapples with gambling and election integrity. Protocols should avoid contracts likely to be deemed against public interest or susceptible to manipulation.

• Governance and disclosures. Clear rules for listing, resolving, and auditing markets, plus independent review of market quality and conflicts.

• Jurisdictional strategy. Operating legally in non-U.S. regions with thorough licensing (e.g., e-money or gaming approvals where applicable), while maintaining strict U.S. geofencing, can support global access without inviting U.S. enforcement.

What Users Should Watch in 2025

• Legal clarity is coming, slowly. Expect more court decisions and potential CFTC guidance narrowing the line between gambling-like products and permissible event contracts. The 2010 concept release still informs today’s policy debate: see the CFTC’s concept release on event contracts.

• U.S. election markets will remain a flashpoint. Platforms listing political outcomes face concentrated regulatory scrutiny; court outcomes like Kalshi’s case could shape what’s allowed.

• Non-custodial access will dominate. As regulators draw sharper lines around intermediaries, users will increasingly rely on self-custody to interact with compliant front-ends or global protocols.

Security, Self-Custody, and Practical Risk Management

Regardless of regulatory outcomes, users should adopt best practices for security:

• Use self-custody wallets to minimize counterparty risk. Hardware wallets help compartmentalize keys away from web threats and phishing, especially when interacting with DeFi front-ends.

• Review market disclosures, oracle design, and resolution rules. Understand how outcomes are determined and what happens during disputes.

• Respect regional restrictions. If a platform geofences U.S. access, don’t circumvent controls — it can create personal legal risk.

If you plan to engage with non-custodial prediction protocols, a hardware wallet like OneKey can provide isolated key storage, secure transaction confirmation, and open-source transparency that pairs well with decentralized markets. Self-custody ensures you retain control of funds even as regulatory debates evolve — reducing reliance on centralized intermediaries and helping you manage exposure across multiple protocols.

The Bottom Line

Polymarket’s history shows that the CFTC will act when off-exchange event markets reach U.S. retail. The recent court opening for Kalshi suggests a viable — albeit narrow — path through formal registration for certain political markets. For “Limitless” and other next-gen platforms, survival hinges on precise market design, rigorous geofencing, non-custodial architecture, and, where appropriate, alignment with registered venues.

In 2025, the battle over “tomorrow’s news” is ultimately a governance question: how to capture the informational value of prediction markets without undermining market integrity or public policy. Crypto’s answer won’t be purely technical. It will require layered compliance — and, for users, disciplined self-custody and risk management.

References and further reading:

• CFTC order against Polymarket: CFTC Order against Blockratize Inc. (Polymarket)
• Coverage of the Polymarket settlement: CFTC fines Polymarket $1.4M
• CFTC’s concept release on event contracts: CFTC concept release on event contracts
• Agency block of Kalshi’s political markets: CFTC blocks Kalshi’s political event contracts
• Court decision opening the door for Kalshi: U.S. appeals court opens door for political betting on Kalshi
• Commissioner Pham’s statement on event contracts: Statement of Commissioner Caroline D. Pham on the Order Disapproving Kalshi’s Congressional Control Contracts