SEC vs. CFTC: Tradfi is Weighing Polymarket Pattern

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By Antoniayly Mar 04, 2026

Prediction markets proved their demand through crypto, and now TradFi exchanges are racing to integrate the same format through regulated rails.

Nasdaq filed with the SEC on Monday to list binary options on the Nasdaq-100 and its micro index. The contracts, called "Outcome-Related Options," would be priced between 1 cent and $1, paying out a fixed amount if a condition is met and expiring worthless if not. It is, functionally, a prediction market product wearing a TradFi suit.

This is not an isolated move. Cboe is targeting a Q2 launch for its own event-focused contracts. CME Group partnered with FanDuel to power a consumer-facing prediction market app. DraftKings' contract-trading arm now operates in 38 states and set a volume record during the Super Bowl. Wall Street has moved beyond experimentation with prediction markets and is now building them into its core product stack.

SEC vs. CFTC, the jurisdictional split

Prediction market trading volume hit $63.5B in 2025, a 4x increase from the prior year. Most of that volume ran through Polymarket and Kalshi, both regulated by the CFTC. Intercontinental Exchange committed $2B to Polymarket last October. Goldman Sachs is reportedly scoping the space.

That kind of capital flow gets attention from every major exchange operator. Polymarket, Kalshi, and CME's prediction products all sit under CFTC oversight because they are classified as event contracts. Nasdaq's binary options, by contrast, would fall under the SEC's jurisdiction because they are structured as securities options on a stock index.

Same economic exposure. Different regulatory wrapper. This distinction will shape who can trade these products, what margin requirements look like, and how they interact with existing brokerage infrastructure. SEC-regulated products slot directly into the accounts of every retail investor with an options-approved brokerage. CFTC-regulated contracts require separate onboarding.

For Nasdaq, this is a distribution advantage. Millions of retail traders already have Nasdaq options access. Binary contracts on the Nasdaq-100 could go live without requiring users to sign up for a new platform.

Crypto's role in this

Prediction markets went mainstream through crypto. Polymarket's 2024 election markets proved the model at scale, and the volume never really came back down. Coinbase rolled out prediction markets on its platform. Gemini received CFTC approval in December to operate as a Designated Contract Market.

Crypto builds the primitive, proves demand, and TradFi absorbs the format into regulated rails. DEXs did it for spot trading. Perpetuals did it for leverage. Now prediction markets are following the same arc.

The difference this time is speed. It took years for TradFi to acknowledge DeFi trading formats. Prediction markets went from Polymarket's election breakout to Nasdaq filing for binary options in under 18 months.

What this means for onchain prediction markets

Onchain platforms are not getting replaced. They still have the edge on exotic, long-tail markets, things like "Will Elon tweet about Dogecoin this week" or niche political outcomes that no exchange compliance team would approve. TradFi will stick to index-level, high-liquidity products where regulatory comfort is high.

But the volume ceiling for onchain prediction markets just got lower. If a retail trader can bet on the Nasdaq-100 direction through their existing Schwab or Fidelity account, the incremental user who would have gone to Polymarket for a similar trade now has a path of least resistance that does not involve a wallet.

The bull case for onchain prediction markets is that they expand into categories TradFi cannot touch: cultural events, crypto-native outcomes, meme-driven markets. The bear case is that the highest-volume use cases, financial markets and elections, get absorbed by incumbents with better distribution.

Nasdaq's filing is one more data point in a trend that has been accelerating all year. Prediction markets are no longer a crypto sideshow. They are a product format that every major exchange operator, from CME to Cboe to Nasdaq, is racing to integrate. The $63.5B in 2025 volume was the proof of concept. 2026 is the buildout year.

For crypto, the takeaway is mixed. The format won. The onchain monopoly on it did not.

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