The stablecoin issuer’s move to provide native USDC settlement for Polymarket comes days after US derivatives regulators withdrew proposals that would have barred large swathes of prediction markets
Circle’s decision to bring native USDC onto Polymarket comes as US regulators appear to be reassessing how far they should go in restricting prediction markets.
On February 5, Circle Internet Group announced a partnership with Polymarket, under which the platform will transition from bridged USDC on Polygon to Circle-issued native USDC in the coming months. The move gives Polymarket access to dollar-denominated settlement infrastructure that Circle says is more capital-efficient, scalable and aligned with institutional market standards.
The announcement followed a significant regulatory reversal the previous day. On February 4, the Commodity Futures Trading Commission withdrew its June 2024 Notice of Proposed Rulemaking that would have imposed a categorical ban on a wide range of event contracts, including those linked to political contests, awards shows and sporting outcomes.
The agency also rescinded a September 2025 staff advisory on sports-related event contracts.
A philosophical shift
In a public statement and subsequent posts on X, CFTC chairman Michael Selig framed the withdrawal as more than a technical rollback. He criticised the abandoned proposal as “the prior administration’s frolic into merit regulation”, arguing that the Commission had overreached by attempting to judge which types of contracts should exist rather than how markets should function.
Selig said the CFTC would now pursue a new rulemaking grounded in a “rational and coherent interpretation” of the Commodity Exchange Act, signalling a shift away from blanket prohibitions toward a more principles-based approach to innovation.
Industry observers noted that while the decision does not legalise prediction markets or provide formal clarity, it materially changes the tone of the debate; the withdrawals reopen the question of whether event contracts should be regulated as financial instruments rather than treated as inherently contrary to the public interest.
The change has caused some unrest among the legislature. During TV appearances and on X, former New Jersey Governor Chris Christie argued that prediction markets trading Super Bowl contracts violate laws in most states by skipping age checks, taxes, and game protections upheld since the 2018 sports betting legalization.
The American Gaming Association backs him, praising the NFL’s ban on their Super Bowl ads, while states issue cease-and-desist orders and predict a Supreme Court showdown. However, Selig supports them – as does much of the crypto industry – as regulated derivatives for hedging, with the agency dropping past restrictions to foster innovation amid booming volumes on events like Seahawks vs. Patriots.
Why settlement infrastructure suddenly matters more
Against that backdrop, Circle’s partnership with Polymarket look like a strategic alignment with a potentially evolving regulatory environment. Polymarket currently uses bridged USDC (USDC.e) on Polygon as collateral for all trading activity. Under the new arrangement, the platform will migrate to native USDC issued by Circle’s regulated affiliates and redeemable one-for-one for US dollars.
For prediction markets, where credibility hinges on the integrity of pricing and settlement, this is significant as bridged assets can introduce operational, liquidity, and redemption risks that sit uneasily with institutional expectations. Native issuance, by contrast, anchors settlement directly to a regulated stablecoin issuer.
Circle CEO Jeremy Allaire said the partnership would bring “the utility and speed of USDC” to Polymarket, while Polymarket founder Shayne Coplan described the move as strengthening “market integrity and reliability” as participation grows.
Positioning for regulation that does not yet exist
Polymarket has increasingly positioned itself as a market-infrastructure project rather than a crypto novelty. In announcing the Circle partnership, the company aligned itself rhetorically with established financial institutions it says have defined standards for regulated markets, framing its long-term goal as building a “transparent, institutional-grade prediction market”.
That positioning now coincides with a regulatory moment in which outright prohibition appears less certain than it did only weeks ago.
The CFTC’s decision does not prevent future enforcement action, nor does it resolve tensions with state-level gambling laws. But it does suggest a pause in an approach that treated event contracts as inherently incompatible with public markets.
For Circle and Polymarket, the partnership appears to be a bet that if prediction markets are to survive in the US, they will need to resemble financial markets in how they settle, manage risk and interface with regulators — even before the rules are fully written.
