US-based ETF issuer Roundhill Investments has filed with the US securities regulator to launch six exchange-traded funds (ETFs) tied to occasion contracts on the end result of the 2028 US presidential election.
ETF analyst Eric Balchunas said in an X publish on Saturday that, if authorized, the ETF merchandise can be “probably groundbreaking.”
“Opens up big door to all types of stuff,” Balchunas stated, including that prediction market purposes are simple to enroll to, however ETFs are “simply that a lot simpler.”
Roundhill Investments filed with the US Securities and Change Fee on Friday to launch six ETF merchandise that enable traders to take a position on the end result of the 2028 US presidential election.
“In looking for to attain its funding goal, the Fund invests in, or seeks publicity to, a singular sort of by-product instrument often known as an occasion contract,” the submitting stated.
The ETFs embrace the Roundhill Democratic President ETF, the Roundhill Republican President ETF, the Roundhill Democratic Senate ETF, the Roundhill Republican Senate ETF, the Roundhill Democratic Home ETF, and the Roundhill Republican Home ETF.
Roundhill Investments warns traders of the dangers
The submitting stated the target of the ETF tied to the profitable election consequence is to ship “capital appreciation,” however warned the opposite 5 ETFs may lose nearly all of their worth.
“This convergence will lead to a sudden and substantial improve or lower within the worth of the Fund’s NAV, which is very distinctive amongst different funding merchandise,” the submitting stated.
The submitting additionally warned traders that US laws on occasion contracts are “evolving,” and any change in how occasion contracts are labeled or “restricted” could have an effect on the fund.
“Political consequence occasion contracts have been the topic of heightened regulatory scrutiny and debate, and regulators could conclude that some or all of such contracts must be restricted, suspended, modified, or prohibited,” the submitting stated, including that traders uncomfortable with regulatory uncertainty ought to keep away from buying shares.
CFTC leans in direction of a good stance on prediction markets
On Feb. 5, Cointelegraph reported that the US Commodity Futures Buying and selling Fee had withdrawn a Biden administration-era proposal to ban sports activities and political prediction markets, that are among the many hottest occasion contracts at present.
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In the meantime, Ethereum co-founder Vitalik Buterin stated he’s beginning to “fear” concerning the course of prediction markets and instructed they shift to marketplaces that hedge towards price-exposure danger for shoppers.
Prediction markets are “over-converging” to “unhealthy” merchandise which might be centered on short-term worth betting and speculative conduct versus long-term constructing, Buterin stated in an X post.
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