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Prediction Markets Push for Regulatory Clarity in Asia, Seek Distance from Gambling
Fintech executives are lobbying for clearer regulations for prediction markets across Asia, arguing they are financial products, not gambling. This push, highlighted at a Hong Kong expo, aims to unlock institutional investment and new demographics by…
Clarifying the Financial Instrument Debate
Fintech industry leaders are intensifying their lobbying efforts for distinct regulatory frameworks governing prediction markets, aiming to differentiate them from gambling operations and mitigate perceived risks. These calls, voiced at Thursday’s iFX Expo Asia in Hong Kong, come as regulators and legal experts throughout Asia deliberate whether to classify these platforms as financial instruments or a form of gambling.
Nicholas Baumer, Chief Commercial Officer at Tickmill, highlighted the significant uncertainty, noting that "Each market is figuring out what they are doing." Prediction markets, exemplified by US-based Polymarket, function as financial exchanges where participants trade on the projected outcomes of various real-world events, from geopolitical shifts to sports results, profiting or losing based on forecast accuracy.
Many such platforms operate in Hong Kong within an ambiguous legal environment. Gabriele Juodele, VP for Strategy and Growth at Plaee, maintained that prediction markets are "a financial product and not a gambling product," citing the US as a market where they are "fully regulated under the same financial derivatives regime as all other financial products," although some US states have imposed restrictions.
Christopher Stiegeler, panel moderator and Executive Director at EBC Financial Group, stated that prediction markets are not "inherently more risky than existing derivatives." He underscored his firm’s commitment to operating within each jurisdiction's regulatory framework. Stiegeler also noted that prediction markets could enhance trading accessibility due to their "more real-world and less technically challenging" nature compared to other financial products.
Market Expansion and Perception Challenges
Panelists concurred that explicit regulation in Asian jurisdictions would draw greater institutional investor interest, fostering the "trust" necessary for market entry, as observed by Peter Iosif, Senior Market Analyst at IronFX. They also agreed that these markets could appeal to new demographics. Serhii Poplavskyi, Head of Match-Trader Platform at Match-Trade Technologies, characterized prediction markets trading as "Gen-Z trading," attributing this to their relative simplicity. However, he cautioned that "Regulation is great, but overregulating kills the business."
A significant industry challenge identified by the panelists is public perception. Baumer emphasized that "Perception will be key in the next six to 12 months." He specifically mentioned Indonesia and Malaysia, noting that if prediction markets are "perceived as sports betting, Islamic countries might have an issue with it." Iosif anticipated a potential "regulatory crackdown," suggesting that prediction markets might eventually integrate with conventional foreign exchange markets.
Juodele projected that "In five years, regulation will be established in Asia and all companies will have [prediction markets] as a product line." Poplavskyi added that "Maybe countries with stricter regulations will re-evaluate" their positions, enabling "technology providers and brokers to expand" into Asian markets and engage new audiences.
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