Why Hedge Funds Are Eyeing Kalshi and Polymarket
What are the regulatory lines and compliance considerations？ Kalshis key differentiator is regulatory status. As a CFTC-regulated DCM, it operates under U.S. derivatives law, implements KYC/AML, sets position limits, and publishes a rulebook. That framework can simplify institutional onboarding, surveillance, and audit trails. However, listing scope is defined by what the CFTC permits for event contracts, and those boundaries can evolve. Polymarket, by contrast, is a crypto-native venue that previously faced CFTC enforcement and subsequently restricted U.S. users. Access typically depends on the participants jurisdiction and internal policies. Compliance teams should assess local regulations, including derivatives, wagering, and securities rules, before transacting. Many institutions choose to limit on-chain prediction activity to non-U.S. affiliates where permissible. Across both, policies should cover market manipulation, conflict-of-interest controls, and MNPI handling—especially when outcomes overlap with companies in the portfolio. Written supervisory procedures, trade surveillance, and communications archiving can help satisfy internal and external oversight. Nothing here is legal advice. Institutions should obtain counsel and review official guidance from regulators such as the CFTC before engaging. How do these markets settle—and can outcomes be gamed？ Settlement mechanics are as important as price. On Kalshi, settlements follow the exchanges rulebook and predefined data sources. If an event resolves to “Yes,” the contract