Wall Street is quietly positioning for what could be the next big wave in crypto: prediction markets. After stablecoins earned mainstream TradFi backing last year, asset managers and trading firms are eyeing event contracts — digital derivatives that let users bet on future outcomes — as the next product to be financialized. Digital-asset manager Bitwise recently filed for a prediction-market-backed ETF under the “PredictionShares” brand, Bloomberg ETF analyst James Seyffart flagged on X. The filing targets event contracts tied to U.S. election outcomes in 2026 and 2028 across House, Senate and presidential races. Bitwise’s move echoes a bullish outlook the firm published for 2026, where it forecast Polymarket would post record open interest ahead of the midterms. “With U.S. midterms approaching and politics coming back into the frame, the platform will be firing on all cylinders in 2026,” Bitwise wrote. Bitwise isn’t alone. Roundhill Investments filed earlier in the budding ETF race, and Seyffart expects more entrants, calling these filings part of the broader “financialization and ETF-ization of everything.” Other asset managers, including GraniteShares, have shown interest in political prediction products, while major trading desks such as Susquehanna (SIG) are reportedly positioning to trade the space. Why it matters: supporters argue prediction markets produce market-priced probabilities that are more actionable than polls because participants have real money at stake — making the data useful for hedging and risk management. That utility has prompted crypto firms and market participants to back Commodity Futures Trading Commission (CFTC) chair Mike Selig’s bid to assert federal oversight over the segment. Opponents — and many U.S. states — treat these platforms as gambling akin to sports betting and call for strict state-level regulation. Whether the CFTC will secure clear, exclusive jurisdiction remains an open legal and political question. The market itself has shown rapid growth since the 2024 U.S. elections. On-chain analytics from Dune put monthly prediction-market volume at a record $12.4 billion in January 2026 — the first month to top $10 billion. Bottom line: Institutional interest and growing trading volumes suggest prediction markets could be primed for mainstream financial products like ETFs, but regulatory uncertainty — particularly over federal versus state oversight — will be the key variable shaping how large the market becomes. Disclaimer: This article is informational and not investment advice. Trading or holding crypto and related products carries high risk; readers should do their own research before making decisions. © 2026 AMBCrypto Read more AI-generated news on: undefined/news

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