Wall Street is quietly positioning for what could be crypto’s next breakout category: prediction markets. After stablecoins crossed into the mainstream with TradFi backing last year, asset managers and trading houses are now lining up for a potential surge in event-contract trading — even as regulatory questions hang in the air. What happened - Digital asset manager Bitwise has filed for a prediction-market-backed ETF under the brand “PredictionShares,” Bloomberg ETF analyst James Seyffart flagged on X. The filing targets event contracts tied to election outcomes in 2026 and 2028 — covering House and Senate races as well as presidential contests. - Bitwise’s move echoed its own outlook that Polymarket could reach record open interest ahead of the 2026 midterms. “With U.S. midterms approaching and politics coming back into the frame, the platform will be firing on all cylinders in 2026,” the firm said in its 2026 projection. - The filing follows an earlier push from Roundhill Investments — the first mover in the prediction-market ETF race — and Seyffart expects more issuers to follow. “This is not the first filing of this kind, and I think it’s extremely unlikely that these will be the last. The financialization and ETF-ization of everything continues.” - Other firms have shown interest: GraniteShares has eyed political prediction products, and major trading shops such as Susquehanna (SIG) are positioning for growth in the space. Why it matters Prediction markets (event contracts) let users trade derivatives on future outcomes. Supporters argue these markets produce stronger, market-based probability signals than traditional polls because participants have capital at risk — a feature that can be valuable for hedging and risk management. That practical angle helps explain why institutional players are exploring ETFs tied to the sector. Regulatory tug-of-war The regulatory picture remains unsettled. Many in crypto and trading circles are rallying behind Commodity Futures Trading Commission (CFTC) Chair Mike Selig, urging federal oversight and arguing states risk regulatory overreach. Opponents — including numerous state regulators — view prediction markets as akin to gambling or sports betting and push for strict oversight or prohibition. Whether the CFTC will assert exclusive jurisdiction is still an open question. Market momentum The category has already seen strong growth since the 2024 U.S. elections. In January 2026, prediction-market volume hit a new monthly record of $12.4 billion, topping $10 billion for the first time, according to on-chain analytics from Dune. Bottom line With product filings from Bitwise and Roundhill, interest from GraniteShares and trading firms, and rising volumes, prediction markets are moving from niche crypto experiment to something that mainstream finance could package and sell — if regulators allow it. Expect more filings and product announcements as the 2026 midterms approach. Disclaimer: AMBCrypto's content is informational and not investment advice. Trading, buying, or selling cryptocurrencies 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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