US-based ETF issuer Roundhill Investments has filed an application with the US securities regulator to launch six exchange-traded funds (ETFs) linked to event-linked contracts following the outcome of the 2028 US presidential election.
ETF analyst Eric Balchunas he said in a Saturday post on X that if approved, the ETF products would be “potentially game-changing.”
“It opens up a huge door to all kinds of things,” Balchunas said, adding that it’s effortless to sign up for forecast market apps, but with ETFs it’s “just a lot easier.”
Roundhill Investments filed on Friday with the U.S. Securities and Exchange Commission on the launch of six ETF products that will allow investors to speculate on the outcome of the 2028 U.S. presidential election.
“In pursuit of its investment objective, the Fund invests in or seeks exposure to a unique type of derivative instrument called an event contract,” the filing reads.
ETFs include the Roundhill Democratic President ETF, Roundhill Republican President ETF, Roundhill Democratic Senate ETF, Roundhill Republican Senate ETF, Roundhill Democratic House ETF and Roundhill Republican ETF.
Roundhill Investments warns investors about the risks
The filing said the purpose of the election-linked ETF is to provide “capital appreciation,” but warned that the other five ETFs could lose almost all of their value.
“This convergence will result in a sudden and significant increase or decrease in the Fund’s NAV, which is highly unique among other investment products,” the filing said.
The filing also warned investors that U.S. regulations surrounding event contracts are “evolving” and any changes to the way event contracts are classified or “limited” could impact the fund.
“Political events contracts have been the subject of increased scrutiny and regulatory debate, and regulators may conclude that some or all such contracts should be restricted, suspended, modified or prohibited,” the filing said, adding that investors uncomfortable with regulatory uncertainty should avoid buying the stock.
CFTC leans towards favorable bias in forecast markets
On February 5, Cointelegraph reported that the U.S. Commodity Futures Trading Commission had withdrawn a Biden administration-era proposal to ban sports and political prediction markets, which are currently among the most popular event contracts.
Related: Trump Media files for two fresh Bitcoin-linked cryptocurrency ETFs, Ether and Cronos
Meanwhile, Ethereum co-founder Vitalik Buterin said he was becoming “worried” about the direction of prediction markets and suggested they move to markets that hedge consumers against the risk of price exposure.
Prediction markets are “over-converged” with “unhealthy” products that focus on short-term price bets and speculative behavior rather than long-term building, Buterin said in X post.
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