Summary
- Messari said it has concluded that introducing Know Your Customer (KYC) procedures is essential to prevent insider trading in prediction markets.
- Messari said platforms that implement KYC can block government officials’ participation in political and geopolitical prediction markets, serving as a barrier to deter abuses of authority.
- Messari added that Polymarket applies KYC selectively for U.S. users, while Kalshi operates a stricter KYC policy.
An analysis has found that adopting Know Your Customer (KYC) procedures is essential to prevent insider trading in prediction markets.
On the 20th (local time), Austin Weiler, a research analyst at cryptoasset (cryptocurrency) research firm Messari, said in an interview with Cointelegraph that “platforms that implement KYC can preemptively restrict certain users’ access to the market,” adding that “for example, it is possible to block government officials from participating in political and geopolitical prediction markets at the source.”
He noted that “it is not possible to completely prevent insiders from passing information to third parties, but KYC serves as an important barrier that deters abuses of authority,” adding that “in on-chain prediction markets without KYC, there is no means to determine whether someone is an insider in the first place.”
He added that among current prediction market platforms, Polymarket applies KYC selectively for U.S. users, while Kalshi operates a stricter KYC policy.
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