The U.S. Federal Deposit Insurance Corp. is monitoring Polymarket contracts on whether major banks including Wells Fargo, JPMorgan Chase, Bank of America and Deutsche Bank will fail. Bloomberg reported on Sept. 25 that regulators and lawmakers are more concerned about the contracts’ potential to influence depositors and trigger a liquidity crisis or bank run than about their current trading volume. Contracts covering failures by the end of this year have generated about $76,000, while an earlier series that expired in July recorded about $591,000. FDIC officials determined that existing ethics rules already prohibit employees from trading on nonpublic information, including information related to the agency’s confidential list of problem banks. Travis Hill, the FDIC’s acting chairman, has warned about speculation on bank-failure timing while also acknowledging that prediction markets could help monitor financial risk. Polymarket argues that such markets reduce information asymmetry and provide ordinary investors with real-time signals that could also dispel unfounded fears. The contracts are available only on Polymarket’s offshore platform, which bars U.S. traders; its U.S. platform, overseen by the Commodity Futures Trading Commission, does not offer individual bank-failure contracts. Kalshi has also rejected such products as inappropriate.