JPMorgan ended Polymarket banking ties but may seek IPO role: FT

JPMorgan cut its banking ties with Polymarket last year amid regulatory concerns, according to a report from the Financial Times. However, the bank has kept some relationships with the company as it considers a potential future IPO role.

Polymarket was told by JPMorgan in October to seek another lender and has since moved to a new bank, though the two companies continue to work together on certain operations and customer fund flows.

The bank has reportedly maintained some ties to Polymarket in part to leave open the possibility of underwriting an eventual public offering if the company decides to list, the report says.

It’s not the first time JPMorgan has scaled back banking ties with an emerging fintech platform. The bank previously told Gemini to seek another banking partner after determining that servicing the crypto company was no longer profitable.

Strike CEO Jack Mallers previously disclosed that JPMorgan closed his bank account without warning or explanation last October, reigniting concerns over crypto debanking.

The development comes amid a boom in prediction markets, which now process billions of dollars in trading across sports, politics, celebrity events and geopolitical developments.

But the surge has also brought increased regulatory scrutiny from federal and state regulators over their classification, products and business practices.

The CFTC maintains authority over event contracts as derivatives, while state regulators have challenged sports-related markets as gambling that should fall under state licensing regimes. 

Regulators are also scrutinizing contracts tied to elections, wars, crime and other sensitive events, alongside risks from insider trading, manipulation, misleading marketing and inadequate consumer safeguards.