Prediction markets are sweeping through Wall Street—NASDAQ and Cboe are entering one after another with strategies to adapt to regulations

Wall Street’s traditional financial institutions are rapidly accelerating their entry into the prediction market business. From mainstream exchanges like NASDAQ and Cboe to crypto asset platforms such as Coinbase and Gemini, the entire financial industry is showing a trend toward integrating event-based trading formats. This phenomenon symbolizes a growing interest among Wall Street investors in new trading methods as they seek reliable returns.

NASDAQ Enters the Regulatory Market with Binary Options

Earlier this week, NASDAQ officially applied to the U.S. Securities and Exchange Commission (SEC) for approval to list binary options linked to the NASDAQ 100 and its micro index. This proposal would allow traders to bet “yes” or “no” on the price movements of specific stock indices.

The proposed binary options contracts would be set within a price range of 1 cent to 1 dollar, paying out a fixed amount if certain conditions are met and expiring worthless if not. This structure directly reflects how market participants perceive the probability of an event occurring. If approved, traders will be able to make more intuitive and straightforward investment decisions based on short-term price movements of major benchmarks like the NASDAQ 100.

Regulatory Strategies of Traditional Finance and Crypto Platforms

Beyond NASDAQ, competitors like Cboe are also showing similar movements. Cboe has revealed plans to enter the prediction market business in response to the rising interest in event-based trading formats.

The adoption of these new formats by traditional financial institutions is driven by the rapid growth of early platforms like Polymarket and Kalshi. These platforms offer trading based on a wide range of event outcomes, from elections to economic data releases, significantly expanding their user bases. However, their regulatory frameworks differ. Existing prediction market platforms such as Polymarket and Kalshi are under the jurisdiction of the Commodity Futures Trading Commission (CFTC), whereas the binary options proposed by NASDAQ and Cboe would fall under the SEC.

In other words, exchanges are adapting prediction formats within existing securities regulations, which is a different approach from the regulatory strategies of crypto asset platforms.

Rapid Response from Crypto Exchanges

The crypto sector is also acting swiftly to capitalize on this wave. Coinbase recently introduced prediction markets on its platform, providing digital asset traders access to contracts related to political, economic, and cultural events.

Notably, Gemini has also made a significant move. The company obtained approval from the CFTC in December, gaining designation as a designated contract market (DCM). This allows Gemini to offer regulated prediction markets to U.S. customers, marking the first time a crypto exchange has received such authorization.

Market Environment and Investor Trends

Indicators of Wall Street investor sentiment can be seen in the current Bitcoin market, which reveals its complexity. Over the weekend, Bitcoin (BTC) fell about 1.38%, trading around $67,360. This follows a midweek surge to nearly $74,000, with recent activity showing selling pressure and consolidation within a narrow trading range.

On-chain data shows that approximately 43% of Bitcoin supply is currently at a loss, contributing to selling pressure during rallies. Meanwhile, the surge in stablecoin inflows suggests that, despite ongoing geopolitical tensions in the Middle East, cash reserves are re-entering the market.

Despite the correction, major cryptocurrencies continue to trend slightly upward. However, the sharp rise of the U.S. dollar and the Federal Reserve’s delayed interest rate cuts continue to weigh heavily on risk assets overall.

Outlook for the Prediction Market Boom on Wall Street

The simultaneous adoption of prediction market formats by traditional financial institutions and crypto platforms indicates more than just a trend; it signals a fundamental shift in market structure. As mainstream exchanges on Wall Street officially enter the prediction market space, this sector is expected to mature and standardize rapidly.

At the same time, differing regulatory frameworks—SEC versus CFTC—are creating distinct developmental paths tailored to the characteristics of traditional finance and crypto assets. For Wall Street investors, the future will likely offer increasing flexibility to choose among multiple trading formats and platforms that best suit their investment strategies.