US Government Intensifies Crackdown on Polymarket’s User Geoblocking
Blockchains, when correctly implemented, transcend borders. US authorities face challenges in regulating this technology.
Access to Crypto
To use cryptocurrencies, individuals need a device and internet connection. Blockchains like Bitcoin, Ethereum, and Solana do not consider location when processing transactions.
IP Address Tracking
Most blockchain services log IP addresses, which can reveal users' approximate locations. For instance, MetaMask collects user IP addresses through its default relay, Infura, leading to privacy concerns highlighted in 2022.
Uniswap Labs states it does not retain personal information, including IP addresses; however, data is transmitted to its servers upon visiting their site. This enables Uniswap and MetaMask to geoblock users from OFAC-sanctioned jurisdictions to comply with regulations against sanctions evasion.
Geoblocking Examples
Polymarket restricts US users by detecting local IP addresses, displaying an unclosable popup for prohibited access. Many crypto apps implement similar measures to avoid regulatory scrutiny.
Recent Regulatory Actions
Reports indicate that FBI agents confiscated Polymarket CEO Shayne Coplan’s devices over concerns about US-based users circumventing geoblocks following a CFTC penalty in 2022. Geoblocking remains a regulatory tactic, although basic VPNs can bypass these barriers.
Binance faced penalties from the US government for allowing users from sanctioned countries, settling for $4.4 billion after facilitating over 1.67 million trades involving US persons over five years. Polymarket processed more than 12 million trades in October alone.
Future Considerations
Individuals globally can theoretically code transactions and interact directly with smart contracts, potentially bypassing geoblocking. Trading on platforms like Uniswap via command line eliminates the need for VPNs.
Blockchain-enabled AI agents managing crypto transactions may offer solutions for US-based entrepreneurs like Coplan.