TLDR
- Polymarket users have traded more than $77,000 on whether major banks will fail before the end of 2026.
- Banks listed include HSBC, Lloyds, JPMorgan Chase, BNP Paribas, Bank of America and Goldman Sachs.
- UK MP Bobby Dean warns the markets could amplify rumors and help trigger bank runs.
- Failure odds for HSBC and Lloyds remain in the low single digits on Polymarket.
- The FCA is discussing prediction markets with overseas regulators, and the Bank of England is monitoring.
Prediction market Polymarket is letting users bet on whether some of the world’s largest banks will collapse before the end of 2026. A UK lawmaker has warned that this betting could help cause the panic it predicts.
More than $77,000 has been traded on the market, according to The Guardian. The market asks which major banks will fail before the year ends.
The list includes British banks HSBC and Lloyds. It also features JPMorgan Chase, BNP Paribas, Bank of America, Goldman Sachs and others.
The amounts traded are small compared with traditional financial markets. Even so, the market has drawn attention from lawmakers and regulators.
MP Raises Concerns Over Bank Run Risk
Bobby Dean is a Liberal Democrat member of Parliament who sits on the Treasury Committee. He has urged regulators not to dismiss the possible effects of these markets.
Dean is concerned that a fast-moving prediction market could amplify existing rumors or fears about a bank. That could lead worried depositors to pull their money out.
Banks depend on customer confidence. Even a solvent bank can face serious pressure if enough customers ask for their deposits back at the same time.
Regulators have paid closer attention to how fast panic spreads online since the 2023 collapse of Silicon Valley Bank. Social media helped speed up withdrawals as customers shared concerns about the bank’s finances.
Dean told The Guardian that UK regulators should raise the issue with their US counterparts. He warned that a sharp move in a bank failure market could contribute to a run.
There is no suggestion that HSBC or Lloyds is in danger of collapse. The odds of failure for both banks have stayed in the low single digits on Polymarket.
Polymarket Responds as Regulators Watch
Polymarket says its markets make information already available to professional investors easier for the public to access.
Banks and hedge funds have long traded credit default swaps. These contracts can be used to hedge against or bet on a decline in a borrower’s ability to repay debt.
The UK Financial Conduct Authority has said financial prediction market products it has reviewed amount to binary options. Selling binary options to UK retail consumers has been banned since 2019 because of their speculative nature and risk of harm.
Polymarket’s offshore platform bars residents of the UK, the United States, the European Union, Canada and some other regions from trading. However, these limits can be bypassed using VPNs.
The FCA says it is discussing prediction markets with overseas regulators to protect market integrity. The Bank of England is also monitoring developments, according to The Guardian.
