# Prediction Market Regulation Challenges

Under the triple pressure of the federal government, state governments, and traditional finance, on-chain prediction markets are no longer just a question of “whether they need to be compliant,” but rather “how to stay compliant without dying.”

What regulators truly want to go after has never been “gambling,” but “the information rights and the pricing power brought by decentralization.” Once prediction markets really grow big, they will directly challenge traditional finance’s monopoly on information and its guidance over funds.

**Right now, there appear to be two compliance paths**: one is to do KYC and geofencing on the front end, while keeping the blockchain tamper-proof; the other is to completely exclude U.S. users and achieve compliance through technical means (zero-knowledge proofs + on-chain identity abstraction). The former is a compromise, the latter is a hardline stance. I favor the latter, because the core value of prediction markets is that “anyone, anytime, can participate in pricing real-world events.” Once fully centralized, it loses its meaning.