Recently, U.S. House Representative Ritchie Torres plans to introduce the "Financial Prediction Market Public Integrity Act" in 2026. The background is a controversial trade on a leading prediction market platform— a trader placed a large bet just hours before a key political event and subsequently profited $400,000. This transaction drew attention mainly because of its "coincidental" timing, strongly suggesting that the trader may have had access to non-public information.

Looking at this case more broadly, decentralized prediction markets are moving into the regulatory spotlight outside the traditional oversight of regulators. This not only reflects the industry's growing maturity and influence but also indicates that future policy tightening is highly likely. Regulatory authorities are beginning to pay attention, essentially asking: how can markets without centralized oversight prevent insider trading?

For DeFi practitioners, this is an important reminder. Decentralized design does not mean unregulated or unconstrained. In fact, it should proactively consider compliance issues at the product level—such as how to design mechanisms to identify and prevent insider trading. Doing so can reduce future policy shocks and is also responsible to market participants.