JPMorgan Chase ended its banking relationship with the prediction market platform Polymarket in late 2025 due to concerns regarding regulatory compliance and risk management. A banking relationship is the formal arrangement where a financial institution provides deposit accounts, payment processing, and liquidity services to a business entity.
While the specific internal risk assessments remain proprietary, the decision reflects a broader trend of traditional financial institutions distancing themselves from platforms that operate in the complex, evolving intersection of crypto assets and derivatives trading. According to reports from the Financial Times, the bank notified Polymarket in October 2025 that it would need to transition its accounts to a different provider (Financial Times, 2026).
Banks terminate relationships with crypto-adjacent businesses primarily to mitigate "de-risking," a strategy where financial institutions shed clients that pose potential regulatory, reputational, or anti-money laundering (AML) risks. Because prediction markets involve speculative betting on real-world events, they often occupy a gray area in financial regulation that can trigger heightened scrutiny from federal oversight bodies like the Office of the Comptroller of the Currency (OCC) or the Federal Reserve.
When a bank identifies that a client’s business model—such as decentralized derivatives trading—could lead to increased regulatory friction, they may choose to exit the relationship to avoid potential fines or enforcement actions. De-risking occurs when a financial institution determines that the cost of monitoring a high-risk client exceeds the revenue generated by that account (IMF, 2024).
What is the history of Polymarket’s regulatory status in the U.S.?
Polymarket is a decentralized prediction market that allows users to trade shares based on the outcome of real-world events. In 2022, the Commodity Futures Trading Commission (CFTC) reached a $1.4 million settlement with the platform, alleging that it operated an unregistered derivatives trading venue (CFTC, 2022). As part of this settlement, the platform was barred from serving users based in the United States.
However, the regulatory landscape shifted in late 2025. Following changes in federal policy under the Trump administration, the regulatory environment became more permissive, allowing Polymarket to re-enter the U.S. market. Despite this shift in federal policy, the internal risk committees of major commercial banks often maintain more conservative standards than government agencies. Even when an industry is legally permitted to operate, large banks may still view the underlying operational risks as incompatible with their institutional appetite (CoinDesk, 2026).
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More from GroundworkEnding a banking relationship does not indicate that a company is failing or insolvent; rather, it is a standard operational transition in the financial industry. Businesses in rapidly evolving sectors often cycle through multiple banking partners as their risk profiles change or as their original banks adjust their institutional compliance policies. In the case of Polymarket, the company has reportedly already moved its accounts to a new, undisclosed financial institution to ensure continuity of service (Financial Times, 2026).
Transitions like this are common for fintech companies. When a relationship ends, the company is typically granted a grace period to move its capital and connect its payment rails to a new partner. The continuity of the business depends on its ability to secure a new banking partner that is comfortable with its specific regulatory and operational profile.
Despite the termination of formal banking services, JPMorgan continues to maintain professional contact with Polymarket. Reports indicate that the bank invited Polymarket’s CEO, Shayne Coplan, to speak at a private client conference in early 2026. Furthermore, industry analysts suggest that JPMorgan remains interested in potential future advisory roles, including underwriting a future initial public offering (IPO) for the platform (Financial Times, 2026).
This nuanced approach highlights the difference between "banking" and "investment banking." While a retail or commercial bank may find the risks of holding a company's deposits too high, the investment banking arm of the same institution may still view the company as a valuable client for capital markets activities. These activities, such as IPO preparation, involve different regulatory frameworks and risk profiles than managing operational banking accounts.
For companies operating in emerging tech or finance, managing banking risk is a critical operational function. To protect your business from sudden de-risking, consider the following steps:
- Maintain diverse banking relationships: Never rely on a single financial institution. Establish accounts with at least two different banks to ensure that if one terminates your service, you have a contingency plan in place.
- Prioritize transparency: Proactively share your compliance manuals, AML/KYC (Know Your Customer) processes, and regulatory audit results with your banking partners. Transparency reduces the likelihood of surprise audits or sudden account closures.
- Monitor regulatory changes: Stay informed about how changes in federal oversight affect your industry. When the regulatory climate shifts, communicate with your bank’s relationship manager to ensure your operations still align with their internal policies.
