Among the changes to the regulatory oversight and enforcement priorities that have accompanied the first six months of Donald Trump’s second term has been an embrace of cryptocurrencies and business models that rely on them.
As we discussed in President Trump's SEC Trims Crypto Oversight, under the leadership of past chair Gary Gensler, the U.S. Securities and Exchange Commission (SEC) led the initiative to regulate cryptocurrencies. The agency’s position was that digital assets generally met the definition of securities under the test set forth by the Supreme Court in SEC v. W.J. Howey Co. (the “Howey test”).[1] Since January 2025, the SEC has stepped back from that broad definition, carving out “meme coins” and “stablecoins” from registration requirements.[2]
In a new signal that cryptocurrency-related businesses can expect more leeway from regulators, the Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) have reportedly closed their formal investigations into event-based trading platform Polymarket.[3]
Polymarket allows customers to wager on a wide variety of predictions, ranging from the outcome of political elections to whether the Earth will be shown to be flat.[4] The platform came to prominence in the run-up to the 2024 U.S. presidential election with extensive advertising at and around the Republican National Convention. Despite a then-existing ban on Polymarket accepting wagers within the United States, the company benefitted from extensive participation from Americans who used virtual private network connections to circumvent location-based restrictions.[5]
The DOJ probe made headlines in November 2024 after a raid by FBI agents of the home of Polymarket CEO Shayne Coplan.[6] The CFTC investigation dated back further, leading to a 2022 settlement that formed the basis for Polymarket agreeing to forgo U.S.-based activity.[7]
Polymarket Returns to the U.S.
With the sunsetting of DOJ and CFTC scrutiny, Polymarket has now reasserted its official presence in the U.S. with its acquisition of derivatives exchange and clearinghouse, QCX, LLC and QC Clearing LLC (QCX).[8]
QCX applied to the CFTC for a designation as a contract market in 2022, and its application was approved on July 9, 2025.[9] Polymarket’s prediction market model currently requires CFTC authorization because that agency oversees the portion of the financial industry that offers investments in futures and swaps. Originally designed to offer farmers and other commodities producers a way to mitigate market price risks, futures and swaps markets have grown to allow investors and speculators to trade exposure to a wide variety of currencies, interest rates, energy and credit prices, among others.
With its $112 million acquisition of QCX, Polymarket is, in the words of Coplan, “laying the foundation to bring Polymarket home – re-entering the U.S. as a fully regulated and compliant platform that will allow Americans to trade their opinions.”[10]
SEC to Remain Vigilant
While certain types of digital assets, such as meme coins and stable coins, no longer require registration and oversight of certain crypto-related markets has shifted to the CFTC, the SEC will continue to monitor the digital assets space for securities-related conduct.
On July 9, 2025, Commissioner Hester Peirce issued a statement reminding market participants that the “tokenization” of securities – where securities are linked to digital assets for record-keeping and trading purposes – does not change the underlying nature of the asset.
Market participants who distribute, purchase, and trade tokenized securities … should consider the nature of these securities and the resulting securities laws implications. [A] token could be a “receipt for a security,” which is itself a security…. Alternatively, a token that does not provide the holder with legal and beneficial ownership of the underlying security could be a “security-based swap” that cannot be traded off exchange by retail persons. While blockchain-based tokenization is new, the process of issuing an instrument representing a security is not.[11]
Peirce was unequivocal in her notice to the markets that the SEC’s role has not fallen by the wayside: “Tokenized securities are still securities.”[12]
[1] 328 U.S. 293 at 298-99.
[2] https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins
[3] https://www.bloomberglaw.com/product/blaw/bloombergterminalnews/bloomberg-terminal-news/SZEFE2DWLU68
[4] https://www.theblock.co/post/331418/the-8-weirdest-things-people-bet-on-via-polymarket-in-2024
[5] https://www.bloomberglaw.com/product/blaw/bloombergterminalnews/bloomberg-terminal-news/SGGZNWT0G1KW
[6] https://www.reuters.com/world/us/fbi-raids-polymarket-ceos-home-seizing-phone-electronics-ny-post-reports-2024-11-13/
[7] https://www.bloomberglaw.com/product/blaw/bloombergterminalnews/bloomberg-terminal-news/SZEFE2DWLU68
[8] https://www.prnewswire.com/news-releases/polymarket-acquires-cftc-licensed-exchange-and-clearinghouse-qcex-for-112-million-302509626.html
[9] https://www.cftc.gov/sites/default/files/filings/documents/2025/orgdcmqcexorderofd250709.pdf
[10] https://www.bloomberglaw.com/product/blaw/bloombergterminalnews/bloomberg-terminal-news/SZR74WTVI5MO
[11] https://www.sec.gov/newsroom/speeches-statements/peirce-statement-tokenized-securities-070925
[12] Id.
