Speculators bet $10 million on Ethereum ETF approval on Polymarket — but it's unclear what they're betting on

Decentralized prediction market platform Polymarket, which allows users to speculate on the outcomes of various real-world events, received more than $10 million in wagers on whether spot Ethereum ETH +0.98% ETFs will be approved by May 31, according to its website.

After a dramatic turn of events earlier this week, the SEC has started engaging with prospective issuers and it now appears likely spot Ethereum ETFs will be approved for trading in the United States. Unsurprisingly, this has been reflected in the betting on Polymarket , where the odds of approval have shot up from 11% to 66%.

However, there is a catch. It's unclear what the market will count as "approval," meaning that betters may be left at odds with the result.

For context, the approval process has two parts. First, the SEC needs to approve the 19b-4 forms, which may happen later today. Then, the issuers need to see their S-1 registration statements go effective. It's less clear when this could happen, but it is anticipated that this could take a few weeks or even months. Only once both things have happened can trading begin.

Betters have raised their hopes of a spot Ethereum ETF approval in the last few days. Image: Polymarket.

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The betting market says that it will rely on the SEC with help from credible reporting to decide the outcome. Yet this doesn't address the issue as the SEC will likely put out information on both forms at the respective times. When it comes to reporting, news media will likely say that the ETFs have been approved if the 19b-4s get the green light, but it's unclear if this will be enough to decide the outcome.

Some observers have noted that a previous prediction market specified that both 19b-4 and S-1 forms were needed to count as approval, but it's unclear whether this will be seen as precedent in any way.

Matthew Sigel, head of digital assets at VanEck, one of the prospective ETF issuers, weighed in on X. He said that ETFs are not considered approved until the SEC has signed off on both forms.

While it's unclear exactly how this situation will be resolved, it seems likely that some people will feel aggrieved with the result—whichever way it falls.