Regulatory Pressure Intensifies: Polymarket and KuCoin in Regulators' Crosshairs

Regulatory Pressure Intensifies: Polymarket and KuCoin in Regulators' Crosshairs

The European regulatory offensive against crypto platforms is gaining momentum. Within a few weeks, authorities in the Netherlands and Austria have taken action against two prominent providers – exposing different vulnerabilities within the industry. While Polymarket faces drastic penalty payments due to lacking a gambling license, the Austrian Financial Market Authority has prohibited KuCoin from conducting new business. The cases mark a turning point: the era when crypto platforms could operate in regulatory gray zones is definitively coming to an end in Europe.

The recent measures demonstrate that regulatory authorities are not merely establishing rules, but are now consistently enforcing them. For the industry, this represents a fundamental change in the rules of the game – with potentially far-reaching impacts on business models, users, and the entire crypto infrastructure in Europe.

The Facts

The Dutch gambling authority Kansspelautoriteit (Ksa) has issued a penalty payment order against Adventure One QSS Inc., the operator of the prediction platform Polymarket. The authority accuses the company of offering gambling services on the Dutch market without the required license ^[1]. If the order is not complied with, a penalty payment of 420,000 euros per week is threatened, capped at 840,000 euros. Additionally, a revenue-dependent fine may be imposed at a later date ^[1].

Particularly explosive: Despite the regulatory order, access for Dutch users has not been restricted so far ^[1]. Ella Seijsener, Director of Licensing and Supervision at the Ksa, stated unequivocally: "Prediction markets are on the rise, including in the Netherlands. This type of company offers bets that are not permitted under any circumstances in our market" ^[1]. With regard to possible societal risks such as "influencing elections," the platform constitutes "illegal gambling" ^[1]. Polymarket had recently come under particular criticism due to bets on Dutch elections ^[1].

The case is not isolated: Ukraine has also recently blocked access to Polymarket ^[1]. The prediction markets industry continues to boom – according to a report by Dune and Keyrock from November 2025, the combined monthly trading volumes of leading prediction platforms exceed 13.5 billion US dollars with more than 43 million transactions ^[1].

In parallel, the Austrian Financial Market Authority (FMA) has prohibited KuCoin EU Exchange GmbH from conducting new business with immediate effect. The reason: the Vienna-based company no longer has "suitable key functions in the area of preventing money laundering and terrorist financing as well as compliance with financial sanctions" ^[2]. Specifically, the positions of anti-money laundering officer and sanctions officer are currently vacant, as are the designated deputies ^[2].

The FMA justifies its measure clearly: "The sustainable filling of the mentioned key functions is a central prerequisite for proper business operations" ^[2]. Until these positions are filled, KuCoin EU may not enter into new business relationships or conclude new contracts or products within existing business relationships ^[2]. Particularly striking: The FMA had only granted KuCoin MiCA approval in November 2025 ^[2] – just a few weeks later, the new business ban followed.

Analysis & Context

The two cases reveal two central vulnerabilities of the crypto industry in the regulatory environment: unclear business models and inadequate compliance structures. Polymarket exemplifies the problem of the gray zone between innovation and regulation. Prediction markets operate at the intersection of information aggregation, financial markets, and gambling – a combination that regulatory authorities view with increasing skepticism. The Dutch Ksa argues not only with formal licensing requirements, but with fundamental societal concerns about election manipulation. This indicates a harder regulatory approach that goes beyond technical compliance issues.

The KuCoin case is different, but no less revealing. Here the question is not whether a business model is permissible, but whether a company can fulfill the obligations it has assumed. The fact that critical compliance positions are vacant raises questions about the operational maturity of even established crypto platforms. For an exchange with over 40 million users worldwide ^[2], the absence of an anti-money laundering officer and sanctions officer is a serious failing – particularly in the context of the new MiCA regulation.

The MiCA regulation creates for the first time a harmonized regulatory framework for crypto service providers in the European Economic Area ^[2]. However, the KuCoin story shows that a MiCA license is not permanent absolution, but requires continuous compliance. For Bitcoin investors, this means: the distinction between regulated and unregulated platforms is becoming more important. While Bitcoin itself as a decentralized protocol remains unaffected by this development, users must increasingly pay attention to regulatory reliability when choosing their exchanges and service providers. The days when large user numbers and trading volumes were considered the sole quality indicator are over.

Conclusion

• European regulatory authorities are moving from rule-setting to consistent enforcement – both for unlicensed business models like Polymarket and for compliance violations by established platforms like KuCoin

• Crypto platforms must not only acquire formal licenses, but support them with sustainable compliance structures – MiCA regulation permanently raises the requirements

• For Bitcoin users, the careful selection of regulated and operationally stable platforms is becoming more important, while Bitcoin itself as a decentralized protocol is not affected by these regulatory developments

• The cases mark a turning point: regulatory gray zones are closing in Europe, which could lead to market consolidation in the short term, but strengthens trust and institutional acceptance in the long term