Polymarket saw nearly $400 million in volume in July, but regulatory changes could introduce restrictions.

Polymarket, the largest crypto-based prediction market, is experiencing record activity but could soon face greater restrictions in the United States.

Polymarket allows users to deposit cryptocurrency and place bets on a variety of events, including but not limited to political outcomes and market developments.

Dune Analytics community data indicates that Polymarket saw $54 million in January volume, up from $6.7 million in December. Growth coincided with betting around the launch of spot Bitcoin ETFs, which were approved in mid-January.

In July, Polymarket’s monthly volume surged to $387 million. This growth was seemingly driven by betting related to the U.S. presidential race, the launch date of spot Ethereum ETFs, and the 2024 Paris Olympic Games.

Polymarket’s usership count also reached a new high in July as monthly active traders exceeded 44,500. By contrast, the platform had approximately 1,600 traders in December 2023 and 4,100 traders in January 2024.

The platform’s August data is on track to meet or exceed July results.

Polymarket’s growing popularity could be tempered by new restrictions in the U.S.

In May, the Commodity Futures Trading Commission (CFTC) proposed a rule that would ban betting on elections under the existing category of “gaming.”

In August, several U.S. senators wrote to the CFTC to urge it to adopt the policy. Senators said that failure to do so would allow for election interference and noted that over a dozen U.S. states already ban election betting.

The latest proposals do not name Polymarket specifically but appear to apply to prediction markets in general, blockchain-based or not.

Polymarket already is restricted in the U.S. Bloomberg recently reported that Polymarket agreed to block U.S. traders from its platform following a 2022 CFTC settlement, which also included payment of a $1.4 million penalty.

Polymarket’s terms of service currently acknowledge the restriction on U.S. access and include a section that disallows VPN access by U.S. users. However, Bloomberg said that U.S. users continue to access the platform in this way.

In its original statement regarding the settlement, the CFTC said that Polymarket had operated an “illegal unregistered or non-designated facility for event-based binary options online trading contracts” since 2020. At the time, the CFTC advised customers to instead use registered services that meet its requirements.

Polymarket’s terms of service indicate that neither it nor the related company Blockratize are registered or licensed by any financial regulatory authority.