Polymarket wants to let American users trade on borrowed money. The prediction market officially filed applications with the National Futures Association (NFA) to secure a license for margin trading in the United States.
The paperwork, submitted via PM Derivatives LLC on July 3, seeks registration as a futures commission merchant (FCM), an NFA Member, and a Swap Firm. Acquiring this license would fundamentally alter the exchange. Traders could open event positions with just a fraction of the usual upfront capital. That structural change is designed to attract high-volume institutional bettors who require capital efficiency.
The expansion requires an additional regulatory hurdle. Polymarket must also convince the Commodity Futures Trading Commission (CFTC) to authorize specific rulebook changes that would permit non-fully collateralized betting across the platform.
This aggressive regulatory push follows a complicated domestic strategy. Polymarket returned to the U.S. in late 2025 by acquiring an existing derivatives exchange. Management used that entity to operate under a centralized framework funded by traditional U.S. dollars, effectively walling off American users from the international crypto platform.
The prediction industry broke all previous volume records in 2026. Polymarket generated nearly $14 billion in combined global and domestic volume in June. But its primary domestic rival is pulling ahead. Kalshi’s affiliate, Kinetic Markets LLC, received NFA approval to operate as an FCM and Swap Firm in March. That license allowed Kalshi to offer margin trading and crypto-linked perpetuals, driving the platform to $33 billion in monthly volume.
The Fight for Institutional Capital
Retail traders using cash deposits launched the prediction market boom. Institutional capital will dictate who wins it. By pushing to allow non-fully collateralized bets, Polymarket is directly targeting Wall Street market makers and high-frequency trading firms. These entities do not park 100% cash collateral for every trade.
Kalshi captured that institutional volume first by securing its FCM license in March, which explains the $19 billion volume gap between the two platforms in June. If the CFTC approves Polymarket’s rulebook amendment, the resulting margin war will compress trading fees and permanently shift the prediction industry away from its retail-first origins.