{"id":60618,"title":"UK urged to regulate offshore prediction markets after bank failure bets","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2026-10-04T09:18:05+00:00","modified":"2026-10-04T09:18:05+00:00","canonical_url":"https://stockmark.it/uk-urged-to-act-as-polymarket-takes-bets-on-whether-hsbc-and-lloyds-wi/","markdown_url":"https://stockmark.it/uk-urged-to-act-as-polymarket-takes-bets-on-whether-hsbc-and-lloyds-wi.md","json_url":"https://stockmark.it/uk-urged-to-act-as-polymarket-takes-bets-on-whether-hsbc-and-lloyds-wi.json","category":"Business","categories":["Business","Economics","Economy"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/uk-urged-to-regulate-offshore-prediction-markets-after-bank.png?fit=1536%2C1024&quality=80&ssl=1","format":"news","language":"en-GB","content":"UK authorities are facing calls to intervene in the regulation of offshore prediction markets following the discovery that the platform Polymarket has facilitated wagers on the potential failure of major global banks. The revelation has intensified scrutiny over the integrity of the financial system, with concerns mounting regarding the potential for market manipulation and insider trading on such platforms. The issue has drawn attention from domestic and international regulators, who are increasingly worried about the risks posed by unregulated betting on significant economic events.\n\nThe online marketplace, which is owned by a US-based company, has allowed users to place positions worth 77,507 dollars, equivalent to 58,530 pounds, on whether the world’s largest banking institutions will collapse by the end of the current year. These wagers include specific bets on prominent lenders such as JP Morgan and BNP Paribas, as well as two of the United Kingdom’s largest high street banks, HSBC and Lloyds Banking Group. Although residents of the UK, the US, Canada, and the European Union are prohibited from participating in these bets on Polymarket’s offshore platform, the service remains accessible to users in approximately 150 other countries. This access allows individuals in these jurisdictions to potentially profit from events that could cause significant financial instability and threaten the health of entire economies.\n\nIn response to these developments, the UK’s Financial Conduct Authority has indicated that it is engaging with international regulators to discuss the implications of prediction markets. The authority stated that these discussions are part of broader efforts to protect market integrity. The concern is particularly acute regarding the potential for bad actors to exploit the platform for insider trading or manipulation. This risk is viewed as a significant threat to the banking industry, which has already been advised to prepare for the possibility of social media-fuelled bank runs. Such events, where customers withdraw funds rapidly, were accelerated by speculation on social platforms during the collapses of Silicon Valley Bank and Credit Suisse in 2023.\n\nBobby Dean, a member of the Treasury committee and Liberal Democrat MP, has urged UK authorities to take decisive action. He highlighted that Polymarket has a poor reputation for preventing insider trading and suggested that the platform could be exploited to aggravate shifts in market sentiment. Dean warned that if bank-related activity on the platform were to escalate rapidly, it could potentially trigger bank runs. He recommended that UK regulators contact their counterparts in the United States to raise these concerns, arguing that the risks should not be ignored simply because they appear small at present. He noted that the sector has a history of rapid and unpredictable movements.\n\nPolymarket has defended its operations, arguing that the platform democratises access to market information that was previously restricted to elite traders and institutions. Neal Kumar, the company’s chief legal officer, stated that the information available in these markets is already public. He noted that banks, hedge funds, and credit professionals have long had access to credit default swap markets. Kumar argued that Polymarket simplifies complex questions and provides a larger audience with access to information on important topics such as bank failures, thereby serving as a source of information and combating disinformation.\n\nHowever, academic experts have warned that these platforms create a serious moral hazard. They argue that the structure of the markets gives participants an incentive to engage in corrupt, illegal, or dangerous actions to rig the outcome of contracts. The European Securities and Markets Authority recently issued a warning in its risk report, stating that prediction markets are rife with inside trading. The report highlighted that market manipulation and insider trading risks have reached new levels on distributed ledger technology platforms like Polymarket. These platforms operate with limited identity verification, meaning the operator may not know who is behind a specific wager.\n\nPolymarket’s offshore platform is built on blockchain technology, with accounts linked to crypto wallets that are publicly traceable but difficult to link back to specific individuals. Despite being headquartered in the US, the platform serves an international user base with anonymous accounts. Some users from restricted countries have reportedly used virtual private networks to bypass bans, a practice that violates the company’s terms of use. The European regulator cited specific incidents, including a US-Israel strike on Iran in February, where newly created wallets reportedly generated 1.2 million dollars in profits shortly before the operation became public. This followed an incident in January involving the US capture of Venezuela’s leader, where a US soldier was criminally charged for allegedly using classified information to place profitable bets. Additionally, in April, police were notified of suspected tampering with weather sensors at Charles de Gaulle airport, which were used to settle weather contracts on the platform. The Bank of England stated that its supervisors regularly engage with companies on emerging risks, while HSBC and Lloyds declined to comment. The Treasury did not respond to requests for comment."}