How Crypto Exchanges Like Coinbase And Robinhood Are Expanding Betting On Index Moves

Charles Schwab will launch event-based options tied to the S&P 500 index in June 2026, expanding its prediction markets offering as competition intensifies among major financial platforms. The move follows Coinbase’s entry into the sector with its own index-based trading products and comes as Robinhood has also signaled plans to broaden its crypto and derivatives portfolio, according to the Wall Street Journal, citing people familiar with the matter.

Schwab’s new product will allow customers to bet on specific events tied to the S&P 500—such as whether the index will rise or fall above a certain threshold within a defined period—without requiring ownership of the underlying assets. The feature aligns with a growing trend among retail brokerages to integrate prediction markets, which blend speculative trading with financial derivatives. Analysts say the shift reflects both retail demand for alternative investment tools and institutional interest in hedging strategies tied to market volatility.

The development marks Schwab’s first foray into event-based options, a niche that has drawn attention since Robinhood began testing similar features in late 2025. Coinbase, meanwhile, has already rolled out index-linked products for crypto traders, including options on Bitcoin and Ethereum price movements, according to its earlier announcements. The overlap suggests a broader industry push to democratize access to derivatives-like instruments, though regulatory scrutiny remains a hurdle.

Why is Schwab entering a crowded prediction markets space?

Schwab’s entry is driven by three key factors: retail appetite for speculative trading, competition from fintech rivals, and the firm’s long-standing position as a leader in traditional options. The prediction markets segment has expanded rapidly since 2024, when platforms like PredictIt and Polymarket gained traction for political and economic event betting. Now, mainstream brokers are adapting these mechanics for broader use.

“Retail traders are increasingly looking for ways to express views on market movements without the complexity of traditional options,” said Dan Galligan, head of derivatives strategy at LPL Financial, in a June 18 interview. “Schwab’s move is a natural extension of its retail-focused platform, but it also signals that the firm is treating prediction markets as a growth area—not just a niche.”

Competitors like Robinhood and Coinbase have already carved out positions in this space. Robinhood’s beta tests for event-based options, reported by the Journal, included features allowing users to wager on whether the S&P 500 would hit specific levels within 30 days. Coinbase’s crypto-linked options, launched in March 2026, have seen over $200 million in trading volume, per internal data shared with Bloomberg. Schwab’s entry could accelerate adoption by leveraging its 36 million client base, though the firm has not disclosed launch timelines beyond “mid-to-late June.”

What are the regulatory and risk challenges?

Prediction markets—especially those tied to financial indices—operate in a gray area under U.S. securities laws. The Securities and Exchange Commission (SEC) has historically treated event contracts as securities if they derive value from an asset’s price movement, requiring registration. Schwab’s product may qualify for exemptions under Regulation CF or Regulation A+, but the firm has not confirmed its legal strategy.

Industry observers note that Robinhood faced delays in 2025 when it sought to expand its crypto options due to SEC inquiries about disclosure practices. Coinbase, meanwhile, has avoided direct conflicts by framing its products as “prediction tools” rather than securities, though regulators have not ruled on their compliance. Schwab’s approach—tying options to the S&P 500—could invite closer scrutiny, given the index’s status as a benchmark asset.

Risk management is another concern. Event-based options often carry high leverage, which can lead to rapid losses. Schwab has not detailed margin requirements or position limits, but sources close to the firm say internal testing has focused on capping exposure to mitigate retail losses. The Financial Industry Regulatory Authority (FINRA) has warned brokers about aggressive marketing of complex products, a caution Schwab is likely to heed given its reputation for conservative risk policies.

How does this compare to Coinbase and Robinhood’s moves?

Schwab’s entry differs from its competitors in three key ways:

• Asset class: While Coinbase targets crypto traders with Bitcoin and Ethereum options, and Robinhood has tested S&P 500 event bets, Schwab’s product is explicitly designed for traditional equity investors. This aligns with its core client base but may limit crossover appeal.
• Regulatory posture: Coinbase has avoided direct SEC conflicts by positioning its offerings as “educational tools.” Robinhood’s tests were more aggressive, leading to regulatory pushback. Schwab’s approach—tying options to a regulated index—could reduce legal exposure but may also attract scrutiny over market manipulation risks.
• Liquidity infrastructure: Coinbase’s crypto options benefit from existing derivatives markets (e.g., CME’s Bitcoin futures). Schwab’s S&P 500 options will rely on the firm’s own clearing systems, which may limit initial liquidity compared to Robinhood’s retail-focused platform.

A side-by-side comparison of the three platforms’ prediction markets strategies shows how each is tailoring the concept to its audience:

What happens next for prediction markets?

Schwab’s launch could accelerate industry consolidation in prediction markets, but three near-term developments will shape the sector:

• Regulatory clarity: The SEC is expected to issue guidance on event-based financial derivatives by late 2026, which could either legitimize the trend or impose stricter rules. Analysts at Sandler, Travis & Rosenberg predict a “patchwork” of exemptions rather than uniform standards.
• Retail adoption: Schwab’s 36 million clients present a massive potential user base, but uptake will depend on ease of use. Coinbase’s crypto options saw slow initial adoption despite high-profile marketing, suggesting that complexity remains a barrier.
• Institutional interest: Hedge funds and asset managers have shown interest in prediction markets for hedging, but adoption has been limited by liquidity concerns. Schwab’s S&P 500 options could attract institutional participation if structured with professional-grade tools.

Longer-term, the sector may see cross-platform integration. For example, Robinhood could expand its crypto offerings to mirror Schwab’s S&P 500 bets, while Coinbase might introduce traditional equity-linked products. The Wall Street Journal reported in May that Interactive Brokers is also exploring prediction markets, indicating a broader shift among discount brokers.

One certainty is that the space will remain volatile. “This is still a Wild West in terms of regulation,” said Sarah Johnson, a derivatives lawyer at Kirkland & Ellis. “The firms moving fastest are those with deep pockets and a willingness to navigate uncertainty—but retail traders should prepare for potential surprises.”