US-based ETF issuer Roundhill Investments has filed with the US securities regulator to launch six exchange-traded funds (ETFs) tied to event contracts on the outcome of the 2028 US presidential election.
ETF analyst Eric Balchunas said in an X post on Saturday that, if approved, the ETF products would be “potentially groundbreaking.”
“Opens up huge door to all kinds of stuff,” Balchunas said, adding that prediction market applications are easy to sign up to, but ETFs are “just that much easier.”
Roundhill Investments filed with the US Securities and Exchange Commission on Friday to launch six ETF products that allow investors to speculate on the outcome of the 2028 US presidential election.
“In seeking to achieve its investment objective, the Fund invests in, or seeks exposure to, a unique type of derivative instrument known as an event contract,“ the filing said.
The ETFs include the Roundhill Democratic President ETF, the Roundhill Republican President ETF, the Roundhill Democratic Senate ETF, the Roundhill Republican Senate ETF, the Roundhill Democratic House ETF, and the Roundhill Republican House ETF.
Roundhill Investments warns investors of the risks
The filing said the objective of the ETF tied to the winning election outcome is to deliver “capital appreciation,” but warned the other five ETFs could lose almost all their value.
Source: Eric Balchunas“This convergence will result in a sudden and substantial increase or decrease in the value of the Fund’s NAV, which is highly unique among other investment products,” the filing said.
The filing also warned investors that US regulations on event contracts are “evolving,” and any change in how event contracts are classified or “restricted” may affect the fund.
“Political outcome event contracts have been the subject of heightened regulatory scrutiny and debate, and regulators may conclude that some or all of such contracts should be limited, suspended, modified, or prohibited,” the filing said, adding that investors uncomfortable with regulatory uncertainty should avoid purchasing shares.
CFTC leans towards a favorable stance on prediction markets
On Feb. 5, Cointelegraph reported that the US Commodity Futures Trading Commission had withdrawn a Biden administration-era proposal to ban sports and political prediction markets, which are among the most popular event contracts today.
Related: Trump Media files for two new crypto ETFs tied to Bitcoin, Ether, Cronos
Meanwhile, Ethereum co-founder Vitalik Buterin said he is starting to “worry” about the direction of prediction markets and suggested they shift to marketplaces that hedge against price-exposure risk for consumers.
Prediction markets are “over-converging” to “unhealthy” products that are focused on short-term price betting and speculative behavior as opposed to long-term building, Buterin said in an X post.
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Source: https://cointelegraph.com/news/roundhill-investments-event-contracts-prediction-markets-etf-united-states-election?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
