UK urged to respond as Polymarket allows bets on HSBC and Lloyds collapse
Prediction market Polymarket has taken in over $77,000 in bets on whether major banks including HSBC and Lloyds could fail this year, prompting the UK's financial regulator to consult with international counterparts over the risks.
Polymarket, the US-owned online betting platform that lets users wager on almost anything from football results to military conflicts, has accepted roughly $77,500 in bets on whether the world's largest banks will collapse by the end of this year. The list includes JP Morgan and BNP Paribas alongside two major UK high street lenders, HSBC and Lloyds Banking Group.
While residents of the UK, US, Canada and the EU are barred from betting on the platform, users in around 150 other countries can still take positions — meaning they could profit from events that would cause serious financial instability in entire economies.
Regulators watching closely
The UK's Financial Conduct Authority (FCA) has confirmed it is in discussions with international regulators about prediction markets as part of efforts to protect market integrity. Concerns are mounting over insider trading and manipulation on the platform.
Treasury committee member and Liberal Democrat MP Bobby Dean called for authorities to step in, warning that Polymarket has a poor track record of preventing insider trading and bad actors, and that a rapidly escalating market could even trigger a bank run.
Polymarket's chief legal officer, Neal Kumar, defended the platform, arguing it simply gives a wider audience access to publicly available information rather than creating new risks.
Past incidents raise alarm
The European Securities and Markets Authority (ESMA) recently warned that blockchain-based platforms with limited identity verification face growing risks of insider trading. It cited the US-Israel strike on Iran in February, when newly created wallets reportedly earned $1.2m in profit shortly before the attack became public, and the January capture of Venezuelan leader Nicolás Maduro, over which a US soldier has been charged with using classified information to place bets. In April, police were also alerted to suspected tampering with weather sensors at Charles de Gaulle airport that are used to settle Polymarket weather contracts.
The Bank of England said it regularly engages with firms on emerging market risks, while Lloyds and HSBC declined to comment.
