Bitwise and GraniteShares Seek SEC Approval for Election‑Prediction ETFs
Two established exchange‑traded fund sponsors have submitted prospectuses to the U.S. Securities and Exchange Commission (SEC) for a suite of products that would let investors trade on the outcome of forthcoming federal elections.
What the filings disclose
- Issuers: Bitwise Asset Management and GraniteShares.
- Product name (Bitwise): “PredictionShares” – a family of six ETFs slated for listing on NYSE Arca.
- Product name (GraniteShares): A parallel set of six ETFs with identical mechanics.
- Regulatory filing: Both companies filed Form 485APOS with the SEC on Tuesday, outlining the fund structures and investment objectives.
Each ETF is designed around a binary “event contract” that settles at $1 if a specific political outcome occurs (e.g., a Democrat winning the 2028 presidential race) and at $0 otherwise. The prospectuses require that at least 80 % of net assets be allocated to these contracts, which are traded on Commodity Futures Trading Commission‑regulated exchanges.
The six funds per issuer break down as follows:
| Election Cycle | Fund Types (per party) |
|---|---|
| Presidential 2028 | Democrat‑win ETF, Republican‑win ETF |
| Senate 2026 | Democrat‑majority ETF, Republican‑majority ETF |
| House 2026 | Democrat‑majority ETF, Republican‑majority ETF |
The share price of each ETF is intended to mirror the market’s implied probability of the associated outcome, fluctuating between $0 and $1 as polls, news cycles and sentiment evolve.
Why this matters to the crypto‑focused audience
The contracts at the heart of these funds are similar to the “prediction market” instruments that have become popular in the digital‑asset space. They are settled in cash and are tradable on regulated futures platforms, providing a bridge between traditional finance and the emerging market for outcome‑based derivatives.
For crypto investors, the filings illustrate two broader trends:
- Financialisation of non‑traditional assets – Just as tokenised commodities and synthetic exposure to DeFi protocols have entered the ETF arena, political events are now being packaged in a regulated, retail‑accessible format.
- Potential cross‑market arbitrage – Since the underlying contracts are CFTC‑regulated, price discrepancies could arise between the ETF share price and the settlement price of the event contracts on futures exchanges. Sophisticated traders may seek to exploit those gaps, a strategy reminiscent of “basis trading” in crypto futures markets.
Analyst perspectives
James Seyffart, Bloomberg’s ETF analyst, noted that the “financialisation and ETF‑isation of everything continues,” highlighting the rapid expansion of product innovation in the exchange‑traded space. He also reminded investors that similar proposals have already been filed—most notably by Roundhill Investments earlier this month—suggesting that the election‑prediction ETF model is likely to proliferate.
Seyffart cautioned that while the ETF structure offers a familiar wrapper for retail investors, the underlying assets carry binary risk: a fund that backs a losing outcome will effectively lose its entire NAV. Consequently, these products are best viewed as highly speculative instruments rather than conventional equity or bond holdings.
Key takeaways
- Regulatory progress: Both Bitwise and GraniteShares are moving forward with SEC filings for six prediction‑market ETFs each, covering the 2028 presidential, 2026 Senate and 2026 House races.
- Binary exposure: At least 80 % of each fund’s assets will be placed in event contracts that settle at $1 for a winning outcome and $0 otherwise, making the ETFs essentially “betting tickets” on political results.
- Price dynamics: Share prices are expected to reflect the market’s real‑time probability assessments, providing a transparent gauge of election sentiment.
- Risk profile: The funds are highly leveraged toward a single binary event; a mismatched outcome will cause near‑total loss of capital.
- Industry signal: The filings underscore a growing appetite among traditional asset managers to monetize prediction markets, a space that has been largely dominated by crypto‑centric platforms.
Investors contemplating these products should treat them as short‑term, speculative positions and conduct thorough due‑diligence, especially regarding the liquidity and settlement mechanics of the underlying event contracts. As the SEC reviews the proposals, the broader market will be watching to see how regulatory bodies address the intersection of political betting and publicly traded vehicles.
Source: https://cointelegraph.com/news/bitwise-graniteshares-join-roundhill-filing-prediction-market-style-etfs?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
