EU Regulators Move to Restrict Retail Access to Prediction Markets

Key Facts

In a move reflecting tightening oversight of the emerging crypto sector, European Union regulators are taking steps to prevent retail investors from accessing high-growth prediction markets by classifying them as financial derivatives. Regulators emphasized that a product's actual function as a derivative is the primary criterion for compliance, regardless of the commercial labeling used by platforms. This intervention aims to ensure these platforms adhere to existing financial regulations designed to protect small-scale investors from high-speculation risks.

This regulatory shift comes as platforms like Polymarket experience record growth, with trading volumes hitting unprecedented levels this year per market data. In comparison to the United States, where platforms like Kalshi have faced legal battles with the CFTC, the EU appears to be adopting a more stringent "substance over form" approach. Industry experts suggest this classification could force platforms to seek complex MiCA licenses to continue operating within the bloc.

Traders should watch for ECB President Lagarde's speech on June 29, 2026, for potential comments on digital asset stability. Meanwhile, EU Economic Sentiment was reported at 95 on June 29, 2026, indicating a cautious broader market environment. The speed at which prediction platforms adapt to these regulatory mandates will be a critical factor for regional liquidity in the coming months.