Prediction Markets Must Use KYC To Curb Insider Trades: Messari

Austin Weiler, a research analyst at Messari, argues that Know Your Customer (KYC) measures are the most effective mechanism for preventing insider trading on prediction markets, as they allow platforms to restrict access to specific markets upfront, especially for state actors in geopolitical markets. While KYC doesn't eliminate all abuse, it creates a significant obstacle. For non-KYC or fully on-chain markets, enforcement is nearly impossible because there is no reliable way to link anonymous wallets to individuals possessing Material Non-Public Information (MNPI). Measures like monitoring unusual trading behavior are easily bypassed in these systems. Currently, established platforms like Kalshi enforce KYC under regulatory oversight, while Polymarket applies it only to US users, and decentralized platforms like Opinion offer no public information on identity checks. This discussion follows intense scrutiny of prediction markets due to high-profile bets on geopolitical events, leading to legislative efforts like the Public Integrity in Financial Prediction Markets Act of 2026.

(Source：Cointelegraph)