Ukraine Restricts Web3 Prediction Markets: The Normative Void Crisis in the Gambling and Prediction Markets Sector

The Ukrainian government has taken drastic measures recently, blocking Polymarket and approximately 200 other platforms related to gambling and prediction markets. This action reveals a fundamental issue: the country’s legal system lacks a clear legal framework for the operation of Web3 prediction markets. As Dmitry Nikolaievskyi, Chief Legal Officer of the Digital Economy Development Office at Ukraine’s Ministry of Digital Transformation, stated in a conversation with CoinDesk, current Ukrainian legislation does not recognize these new forms of markets.

What happened: The restriction system and the scale of blocked operations

The restriction action was initiated by the National Commission for the Regulation of Electronic Communications (NKEK), which issued a directive to all internet service providers. They were instructed to block Ukrainian users’ access to identified prediction markets and gambling sites. The scale of this operation is significant: besides Polymarket, nearly 200 other web platforms have been subjected to the same restrictive treatment.

Why was the decision made: Legal and regulatory considerations

The decision to restrict Polymarket was supported by recommendations from PlayCity, Ukraine’s national gambling regulator. The main reason cited is that Polymarket operates without a license for gambling, which is required under local legislation. The issue is further complicated when considering the betting content available on the platform: it hosts bets related to politics and military topics, including bets on the Russia-Ukraine conflict. According to current regulations, this type of activity cannot be conducted without specific authorizations.

The fundamental problem: Normative gap in Web3 and prediction markets

Although legal procedures have been followed, the core issue remains unresolved: Ukraine lacks comprehensive legislation to recognize and regulate decentralized prediction markets. This normative gap creates a situation where authorities do not have adequate legal tools to manage these new platforms. The fact that Web3 prediction markets do not fall into traditional categories of gambling or financial services makes applying existing laws problematic. If this path continues, Ukraine will remain in a position where restriction becomes the only available option, in the absence of a modern legal framework to guide legal and secure operations.