The ETF industry, following the launch of Bitcoin ETFs, is now exploring prediction markets as a new core exposure.
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Bitwise Asset Management and Roundhill Investments have filed with the Securities and Exchange Commission to launch ETFs tied to prospective market contracts.
ETFs as a distribution layer
Initial filings focus on political events – contracts such as “Democratic President Wins 2028 Election” or “Republican President Wins 2028 Election.”
The logic mirrors what happened with Bitcoin. Investors can already open live accounts on platforms such as everything or Polymarketbut many won’t – or can’t.
The ETF solves this problem by allowing them to gain exposure through standard brokerage accounts. “If you think about the ETF industry in a big way… it requires interesting financial applications and packaging them into an easy wrapper that people can access,” Matt Hogan, IT director at Bitwise, said on the Trillions podcast.
“I think prediction markets are one of the most important new financial ideas perhaps since cryptocurrencies, and if we can package them into an ETF, you will see widespread use of them in different portfolio settings.” – @Matt_Hogan Over the trillions of ETFs in the prediction market, which will likely come… pic.twitter.com/PECCdbNBzE
– Eric Balchunas (@EricBalchunas) April 9, 2026
“This is a natural extension of that.” Mechanically, ETFs will either hold the underlying prediction market contracts directly or use swaps with institutional counterparties to replicate the performance of the contract.
Why do exporters start with politics?
The focus on politics is deliberate. Sports-related contracts are currently under pressure from state gambling regulators, and issuers are clearly staying away.
“The presidential election is going to impact a huge number of investments. Whether Michigan beats UConn or not is not going to impact a huge number of investments,” Hogan said.
By linking products to events with clear financial and economic implications, issuers position them as hedging instruments rather than gambling instruments.
The regulatory path is unclear
The release path is not guaranteed. The SEC will examine the liquidity of the underlying contracts and the quality of disclosure. Hogan described the process as a “dance” — arranging trading partnerships, confirming swap counterparties, and building the infrastructure regulators want to see before approving.
precedent of Bitcoin ETFWhat’s important here. That process was long and controversial, but it ultimately succeeded, leaving the industry with clearer rules for accepting unconventional products through SEC review.
For brokers and asset managers, the signal is clear and straightforward: the same mechanism that brought cryptocurrencies to mainstream wallets is now being referenced. Prediction markets.
If successful, these deposits open up a new asset class for retail and institutional investors alike — and reshape how market participants hedge exposure to political and macroeconomic outcomes.
This article was written by Tanya Chipkova at www.financemagnates.com.
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