Institutional Liquidity Floods Prediction Markets
Wall Street-style market making has officially arrived in the prediction market sector. On Tuesday, reports confirmed that global trading firm Jump Trading is set to acquire equity stakes in both Polymarket and Kalshi in exchange for providing liquidity. According to CoinDesk, the deal structure varies between the two platforms: Jump will take a fixed equity amount in Kalshi, while its stake in Polymarket will accrue over time based on the trading capacity provided.
This institutional vote of confidence arrives alongside staggering growth figures. A new report from security firm CertiK indicates that the prediction market sector expanded 4x in 2025, reaching a total volume of $63.5B. However, Decrypt notes that this growth brings potential structural strains, including incentive-driven volume and fragile security designs that could be tested in 2026.
Regulatory Landscape Shifts: CFTC Cuts and State Lawsuits
As volumes explode, the regulatory environment is undergoing a radical transformation. In a surprising development, the CFTC's flagship Chicago office has reportedly eliminated its entire team of enforcement attorneys. Decrypt reports that monetary relief secured by the agency plunged by over 99.9% in the last year, signaling a potential pivot away from aggressive enforcement against crypto and prediction market entities.
Despite the potential federal thaw, state-level battles are intensifying. Polymarket has filed a lawsuit against the state of Massachusetts in federal court. As reported by Cointelegraph, the platform argues that state regulators lack the authority to ban CFTC-approved prediction markets, a move precipitated by looming bans on Kalshi's sports markets in Massachusetts and Nevada.
New 'Attention Markets' Launch
Amidst the legal and financial maneuvering, product innovation continues. The Defiant revealed today that Kaito and Polymarket have unveiled "Attention Markets," a new instrument designed to trade on information flow and user attention metrics.
Investors tracking these rapidly evolving liquidity pools and legal developments can use predictionmarketstools.com to monitor real-time volume shifts and market sentiment across these competing platforms.