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Prediction markets won weighty endorsements from U.S. officials and Wall Street this week, even as the industry parried fresh legal attacks.In a landmark research paper, Federal Reserve researchers said prediction markets deliver “statistically significant improvements” over traditional gauges in forecasting economic trends.Meanwhile, Bitwise Asset Management filed to launch the first exchange-traded funds (ETFs) tied to election markets, and U.S. regulatory chief Mike Selig vowed to defend the industry against mounting state-level legal challenges.<h2 id="federal-reserve-touts-kalshi-as-forecasting-tool">Federal Reserve Touts Kalshi as Forecasting Tool</h2><img src="https://academy-public.coinmarketcap.com/optimized-uploads/3c5a8b41168c49498be8c797bfbbc208.png">Federal Reserve researchers endorsed Kalshi as a forecasting tool. Source: <a href="https://x.com/Kalshi/status/2024227469515960580?s=20" rel="noopener noreferrer nofollow">X/Kalshi</a>On Feb. 12, three Federal Reserve economists released a paper asserting that prediction markets—specifically Kalshi’s—can gauge economic signals faster and more accurately than established benchmarks.The paper said Kalshi provides a “high-frequency, continuously updated, distributionally rich benchmark” that can outperform surveys and traditional financial derivatives in tracking beliefs about inflation, growth, and interest rates.They argued Fed researchers should incorporate Kalshi’s markets into economic research, potentially informing the U.S. central bank’s policy decisions.“The Federal Reserve just validated [prediction markets] as a serious benchmark,” Prithvir Jhaveri, CEO of prediction markets aggregator TradeFox, said in a Feb. 20 X <a href="https://x.com/Prithvir12/status/2024741319760060661?s=20" rel="noopener noreferrer nofollow">post</a>.Financial institutions are also warming to event contracts.On Feb. 18, Lynn Martin, president of the New York Stock Exchange, said prediction markets are increasingly popular among traditional asset allocators.“It was very clear for us… that prediction markets [were being used] as an input to traditional markets,” Martin <a href="https://www.coindesk.com/policy/2026/02/18/what-happens-on-prediction-platforms-can-steer-traditional-markets-nyse-chief-says" rel="noopener noreferrer nofollow">reportedly</a> said Wednesday at the World Liberty Forum in Palm Beach, Florida.Not everyone has celebrated the shift.In a Feb. 14 X <a href="https://x.com/VitalikButerin/status/2022669570788487542?s=20" rel="noopener noreferrer nofollow">post</a>, Ethereum co-founder Vitalik Buterin expressed concerns that prediction markets are “over-converging to an unhealthy product market fit.”According to Buterin, prediction platforms are prioritizing contracts “that have dopamine value but not any kind of long-term fulfillment or societal information value.”<h2 id="bitwise-readies-election-contract-etfs">Bitwise Readies Election Contract ETFs</h2><img src="https://academy-public.coinmarketcap.com/optimized-uploads/a2bc193df81b4e9f896eb62c34308fbc.png">Bitwise plans to roll out six prediction market ETFs. Source: <a href="https://www.linkedin.com/company/bitwise-asset-management" rel="noopener noreferrer nofollow">Bitwise</a>Asset manager Bitwise is also wagering on prediction markets’ continued adoption.On Feb. 19, Bitwise filed with the Securities and Exchange Commission to list “Prediction Shares” ETFs that would track prediction-market odds on U.S. elections.The firm proposed creating two funds tied to the 2028 presidential race—one for a Democratic win, one for a Republican win—and four similar products for the 2026 midterms elections.Two other asset managers, Roundhill Financial and GraniteShares, also filed to list ETFs tied to event contracts.<h2 id="cftc-backs-event-contracts-amid-legal-disputes">CFTC Backs Event Contracts Amid Legal Disputes</h2><img src="https://academy-public.coinmarketcap.com/optimized-uploads/ebc02cd03d19479093550575394922e5.png">The CFTC plans to back prediction markets in state legal disputes. Source: <a href="https://x.com/ChairmanSelig/status/2023744651216240966?s=20" rel="noopener noreferrer nofollow">X/Mike Selig</a>CFTC Chair Mike Selig bolstered the agency’s defense of prediction markets this week as state-level challenges intensified.The CFTC, short for the Commodity Futures Trading Commission, is the U.S. federal agency responsible for regulating financial derivatives.In a Feb. 17 <a href="https://x.com/ChairmanSelig/status/2023744651216240966?s=20" rel="noopener noreferrer nofollow">video</a> posted on X, Selig warned that if states move to block event contracts, “we will see you in court.” He said the CFTC intends to “defend its exclusive jurisdiction” over the products, framing them as federally regulated derivatives rather than gambling.The clash intensified in Nevada, where the state sued Kalshi after a court allowed its gaming regulator to move forward with efforts to block Kalshi’s sports-related contracts. Nevada argues the contracts amount to unlicensed sports betting.Industry advocates also mobilized. The Digital Chamber, a blockchain policy group, launched a Prediction Markets Working Group aimed at pushing for clearer federal rules and keeping the CFTC as the primary regulator for event-based contracts.<h2 id="by-the-numbers">By the Numbers</h2>What price will Bitcoin hit in February?<ul><li>$60,000: 21.0%</li><li>$75,000: 16.5%</li><li>$55,000: 7.5%</li><li>$80,000: 4.2%</li></ul><img src="https://academy-public.coinmarketcap.com/optimized-uploads/d22f3939f7304155ae7c770610961173.png">Source: <a href="https://coinmarketcap.com/prediction-markets/" rel="noopener noreferrer nofollow">CoinMarketCap</a>What price will Ethereum hit in February?<ul><li>$1,600: 11.5%</li><li>$1,400: 4.0%</li><li>$1,200: 1.7%</li><li>$2,800: 1.5%</li></ul><img src="https://academy-public.coinmarketcap.com/optimized-uploads/f81c0f435b0341fdb821a7273ecd7e10.png">Source: <a href="https://coinmarketcap.com/prediction-markets/" rel="noopener noreferrer nofollow">CoinMarketCap</a>What price will Solana hit in February?<ul><li>$60: 7.1%</li><li>$120: 1.9%</li><li>$50: 1.3%</li><li>$130: 1.1%</li></ul><img src="https://academy-public.coinmarketcap.com/optimized-uploads/05591871f8954e8a849c866fbfb25237.png">Source: <a href="https://coinmarketcap.com/prediction-markets/" rel="noopener noreferrer nofollow">CoinMarketCap</a>

Prediction Markets News: Feds, Wall Street Bet on Prediction Markets as Legal Fights Ignite

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