ICE’s $2B Polymarket Bet Expands Its Crypto Footprint

The cryptocurrency market is capturing a significant amount of attention and capital from traditional institutions. Hundreds of billions of dollars have been poured into the crypto market over the last three years.

The infusion of all this capital has driven Bitcoin (BTC ) to an all-time high (ATH) of above $126,000, and the total cryptocurrency market capitalization to nearly $4.4 trillion.

As prices go higher and digital assets gain widespread popularity and adoption, it is driving further capital inflows into the industry. This week, NYSE parent company, Intercontinental Exchange (ICE ), became the latest firm to announce that it would invest as much as $2 billion in Polymarket.

This is one of the largest private investments ever made in a crypto-native platform, emphasizing the evolving crypto space and the greater involvement of traditional financial infrastructure in decentralized markets.

The investment values Polymarket at $8-$9 billion pre-money, a sharp jump from the $1 billion valuation the company got in its last fundraising round that took place earlier this year. This cash infusion can help the world’s largest prediction market re-enter the US more than three years after restricting American users.

“Together, we’re expanding how individuals and institutions use probabilities to understand and price the future,” said Polymarket CEO Shayne Coplan. This collaboration with ICE, which he described as a fusion of “institutional scale and consumer savvy,” is a major step toward mainstreaming prediction markets.

Meanwhile, ICE CEO Jeffrey Sprecher described the investment as “an opportunity to uniquely serve markets together.”

As part of the all-cash agreement, ICE will be using Polymarket’s data to provide a market sentiment index on related topics. 

“The real prize for ICE is not just clearing contracts but monetizing the data, selling odds as sentiment factors alongside rates and credit where every rumor pays a fee.”

– Running Point Capital Advisors’ CIO Michael Ashley Schulman

Besides utilizing event-driven data, Polymarket and ICE will also work together on tokenization initiatives. Real-world asset (RWA) tokenization is yet another popular trend this cycle, with $33.5 billion worth of assets already put on-chain.

Sprecher “is a big believer in tokenization,” and “Polymarket is a major consumer product in this space, with every prediction market tokenized,” noted Coplan in an interview, adding, “We’re leaning on Intercontinental Exchange for regulatory insights, while we bring consumer expertise. Together, we see a clear vision for Polymarket.”

Following the announcement, the price of the ICE stocks rose by 5% to $166 before coming back down. Now, it is trading under $160, up 8.7% so far this year. Just a couple of months ago, ICE hit a peak of $189.

The $92.7 billion market cap company delivers an EPS (TTM) of 5.21 and a P/E (TTM) of 31.08. It pays a dividend yield of 1.19%.

Institutional Adoption of Prediction Markets: Polymarket’s Surge

It was last month that reports emerged that Polymarket is preparing for its comeback to the US, seeking funding that could take its valuation to $10 billion, up from $1 billion in June when the company raised a $200 million round led by Peter Thiel’s Founders Fund.

While markets that allow betting on the outcome of various events have existed for many years, it wasn’t until late last year that they gained mainstream popularity. Ever since the presidential election in 2024, prediction markets have seen a surge in institutional interest.

It was at that time that millions of people wagered over $3 billion on the election outcome over the course of several months, resulting in a forecast more accurate than the esteemed polls.

What’s different about Polymarket, though, is that it’s a cryptocurrency-based prediction market. 

Prediction markets are where users wager on outcomes across sports, entertainment, politics, and the economy. Besides betting on outcomes, prediction markets also aggregate opinions to gauge public sentiment or predict the likelihood of specific events.

Unlike crypto-powered Polymarket, traditional prediction markets are online platforms where a person places bets that are managed by centralized entities, which are responsible for making the rules. In contrast, decentralized prediction markets operate on blockchain technology with no single entity in control of the platform; rather, a distributed network of computers manages its operation. 

While the foundation of blockchain makes the operations more transparent and secure than centralized systems, they also utilize oracles to bridge the real world with blockchain by providing essential data and smart contracts to execute transactions automatically.

Decentralized prediction markets offer the benefits of transparency, fairness, global accessibility, and resistance to censorship. However, they also face risks such as volatility, liquidity issues, flaws in smart contract code, and regulatory uncertainty. 

Against this backdrop, users on Polymarket are currently betting on when the US government shutdown will end, who will win the New York City mayoral election, what will be the Fed’s decision this month, whether there be a ceasefire between Israel and Hamas by October 31, and the price movements of Bitcoin, Ether, and XRP, among many other topics across politics, tech, culture, elections, and earnings.

People buy and sell ‘shares’ in any of these real-world event outcomes, with their market prices reflecting implied probabilities. Trades, meanwhile, are settled in the 2nd-largest stablecoin, USDC, with users trading yes or no outcomes on a wide variety of topics.

The capability of platforms like Polymarket to blend crowdsourced wisdom and financial interest to provide an unrivaled window into future events has institutions exploring the burgeoning sector.

This includes Ken Griffin’s Citadel, which is engaged in market-making and high-frequency trading, and is considering launching its own or investing in a prediction and betting platform, according to Bloomberg. 

Polymarket’s U.S. Return: CFTC Steps, QCEX Deal, and Regulation

While widely popular today, with its trading volume exceeding $19 billion over the past year, Polymarket has been live since 2020, but the platform ran into regulatory hurdles.

Back in 2022, it had to move offshore after settling charges with the US Commodity Futures Trading Commission (CFTC) for running an unregistered exchange. But just last month, Polymarket obtained approval from the US derivatives market regulator to relaunch in the country.

This past year, the US regulatory landscape has made a vast shift under the Trump administration, which significantly eased market oversight, with a focus on crypto and event contracts.

SEC and CFTC heads have also suggested that they’re willing to give innovators more freedom to “list event contracts on prediction markets responsibly.”

In July, federal prosecutors also closed an investigation into Polymarket founder and CEO Coplan that began under the Biden administration. A month later, the company secured an undisclosed investment, estimated to be worth “double-digit millions of dollars,” from the VC firm 1789 Capital, backed by Donald Trump Jr. 

The president’s eldest son is also a partner in the VC firm, becoming one just last year. “Polymarket cuts through media spin and so-called ‘expert’ opinion by letting people bet on what they actually believe will happen in the world,” he said in a statement. 

Polymarket vs. Kalshi: Models, Partners, and Parlay Features

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Besides making an investment, Trump Jr. has also joined Polymarket as an advisor, much like he is to the rival Kalshi. 

The CFTC-regulated exchange & prediction market, Kalshi, has been signing deals with online brokerages, including Webull and Robinhood, that make wagering on betting contracts as simple as trading stocks. It was recently revealed that Kalshi would soon also be offering complex parlay bets. By securing investments from Citadel Securities CEO Peng Zhao and Charles Schwab, Kalshi recently achieved a valuation of $2 billion.

But more importantly, the approval for Polymarket came after the platform acquired QCEX, a Florida-based CFTC-licensed derivatives exchange, and its affiliated clearinghouse, QC Clearing, in a $112 million deal.

With this acquisition, “we are laying the foundation to bring Polymarket home — re-entering the US as a fully regulated and compliant platform that will allow Americans to trade their opinions,” said CEO Coplan in a statement at the time.

The CFTC issued a no-action letter to QCX in early September, granting Polymarket relief from certain record-keeping and reporting requirements.

So, platforms like Polymarket and Kalshi are clearly attracting a lot of institutional interest and capital, and all this traction is expected to drive the global prediction market’s volume much higher and revenue to surpass $16.65 billion by 2030. 

How ICE’s $2B Polymarket Bet Expands Its Crypto Footprint

With its investment in Polymarket, ICE is becoming a global distributor of its data and exploring tokenization. This way, it is integrating deeper into the crypto sector and now expanding into event-driven prediction markets as well.

Intercontinental Exchange is primarily involved in providing financial technology and data services across major asset classes. It operates through a few key segments, including Fixed Income and Data Services, Mortgage Technology, and Exchanges.

ICE is actually the owner of the New York Stock Exchange (NYSE), the world’s largest stock exchange by market cap, which surpasses $28 trillion.

There are over 50 major stock exchanges around the world, varying in size and volume, but each contributing to the economies of their respective regions by enabling companies to issue shares and raise capital while providing investors the opportunity to own these shares and earn returns on their investments. 

After leading the TradFi market, ICE is now working on advancing its presence in the crypto sector. Polymarket is a big step towards that, but ICE isn’t new to crypto.

It is actually the same company that helped launch and still owns a majority share in Bakkt.

ICE first entered the industry back in 2018 when it announced the digital asset platform Bakkt (BKKT ) in partnership with Microsoft , Starbucks, Boston Consulting Group (BCG), and others. The platform raised $182.5 million in its funding round. 

However, it wasn’t until late 2019 that it was launched, and Bitcoin futures went live on Bakkt. Cash-settled Bitcoin futures and Bitcoin monthly options were also launched during that time. Over time, Bakkt expanded to other digital assets like loyalty points and advanced its consumer payments initiatives.

The company earns revenue from commissions for the purchases and sales of cryptocurrency, as well as payments.

In 2021, Bakkt went public and received a BitLicense in New York to start operating in the state and offer its custody services to a wider audience. Bakkt completed a merger with SPAC VPC Impact Acquisition Holdings to become Bakkt Holdings and get listed on the NYSE.

Today, BKKT shares are trading at around $39, up over 57% this year but down substantially from the peak of $1,200 in November 2021. Over the next couple of years, the company’s stocks experienced a major drawdown, and in April 2024, BKKT shares dropped under $6.

But it wasn’t all just down-only. Bakkt’s share price has been experiencing bouts of momentum time and again. In November last year, prices jumped over 162% after a report claimed Trump’s media company was in talks to acquire the firm. And before that, when ICE was considering breaking it into smaller entities.

However, this year, it got a warning from the NYSE that the company was at risk of being delisted, so Bakkt had a reverse stock split at a 1-for-25 ratio.

With a market cap of $900 million, Bakkt has an EPS (TTM) of -4.49 and a P/E (TTM) of -8.66.

Despite the stock outperformance last cycle, Bakkt never really captured the market’s interest, given its history of losses. In early 2023, the company had to cease its retail business. This year, the company lost two of its largest clients, Webull and Bank of America, and sold its loyalty points business for $11 million.

Per its 2024 financials, Bakkt Holdings Inc. Class A (BKKT) reported a net loss of $103.4 million and total revenue of $3,490.2 million. The revenue increased significantly from the previous year, primarily due to a rise in its crypto services revenue from $727 million to $3,441.1 million, 74% of which was attributed to Webull.

With Bakkt, the goal was to simplify the process for traditional and financial institutions to trade cryptocurrencies. In hopes of becoming the on-ramp of the institutional investor, the platform even announced BakktX last summer to position itself “as an ideal partner for institutions seeking a compliant, qualified trading venue. This will be a truly groundbreaking solution that fulfills a currently unmet need in the U.S. market,” said COO Ray Kamrath.

The crypto software firm is now looking to raise up to $1 billion through a combination of  debt securities, preferred stock, Class A common stock, and warrants, which would then be used to fund Bitcoin and other digital asset purchases “as part of our broader treasury and corporate strategy.”

Combined with the $2 billion investment in Polymarket, Intercontinental Exchange is stepping further into the crypto field to focus on real-time sentiment data and tokenization to bridge traditional finance and decentralized systems in a way that unlocks new layers of liquidity and insight in order to build the next generation of global markets.