Polymarket faced calls for UK intervention after taking about $77,500 in bets on whether major banks, including HSBC and Lloyds, would fail by the end of 2026.

The platform offers contracts on whether global banks will fail by year-end 2026, with more than $77,000 traded as of the article date.

European regulators, led by ESMA, warn prediction markets carry insider trading and market manipulation risks, especially on blockchain-based platforms with limited identity verification.

ESMA notes cases of profit from insider moves and links to prior events, underscoring concerns about market integrity in such platforms.

A UK Liberal Democrat lawmaker warns that fast-moving prediction markets could spread rumors, erode confidence, and even contribute to bank runs.

regulators say there is no evidence any listed banks are in imminent danger, with market probabilities remaining in the low single digits.

Regulators are watching: the FCA says financial prediction-market products resemble binary options and may be restricted, while the Bank of England monitors developments.

UK rules currently cover prediction markets: the FCA treats financial prediction products as binary options (banned for retail sales) and the Gambling Commission oversees non-financial prediction markets; the 2026 FCA perimeter report flags them as an emerging issue.

The Bank of England says it discusses emerging market risks with firms, but there is no evidence Polymarket trading has affected depositor behavior to date.

Polymarket argues its markets democratize information and serve as a price-discovery mechanism that can reduce disinformation, highlighting its broad audience and public nature.

Polymarket’s offshore platform restricts UK, US, Canada, and EU users, but about 150 other countries can access it, with some users bypassing restrictions via VPNs.

The platform uses blockchain and crypto wallets, enabling anonymity and making identity verification challenging, contributing to regulatory concerns about evasion.