‘Betting on JPMorgan Failure’: US Regulators Scrutinize Polymarket Bank-Failure Contracts

Forecast Trend Report by Period

U.S. financial regulators and lawmakers are closely watching prediction-market contracts that let traders bet on whether major global banks will fail. The concern is that, if trading grows, the contracts could rattle depositors and fuel an actual bank run.

Bloomberg reported on September 25, citing people familiar with the matter, that the Federal Deposit Insurance Corp. is monitoring bank-failure contracts traded on prediction-market platform Polymarket. The banks covered include Wells Fargo, JPMorgan Chase, Bank of America and Deutsche Bank.

The market is small for now. Trading volume on whether individual banks will fail is mostly in the hundreds to thousands of dollars. Total volume in contracts predicting whether specific banks will fail by the end of this year is about $76,000. An earlier set of contracts that expired in July drew cumulative volume of about $591,000.