SEC Extends Review Period for 24 Proposed Prediction-Market ETFs

The Securities and Exchange Commission delayed the launch of 24 prediction markets ETFs on Tuesday, citing the need for additional time to study the products before they reach investors. Roundhill Investments, Bitwise and GraniteShares filed with the SEC in February to launch the funds. The 75-day window for the ETFs was due to expire last week.

Under SEC rules, ETFs are automatically effective 75 days after filing unless halted by the agency. The ETFs are tied to prediction markets covering elections, economic data and other real-world events. Prediction markets ETFs are tied to event contracts and place bets on real-world events.

The delay should not be surprising even as the SEC under the Trump administration has sought to ease market access and reduce oversight of novel products, according to ETF experts. A novel private credit ETF that State Street launched last year ran into multiple SEC hurdles post-launch. Spot bitcoin ETFs gained approval only in January 2024 after years of resistance.

Grayscale successfully challenged the SEC in federal court in 2023. Kalshi sued the federal government and won the right to launch contracts on the 2024 presidential election. Questions about insider trading in prediction markets have intensified recently.

The Commodity Futures Trading Commission has primary oversight for prediction markets. U.S. Senate in February that the SEC needs to play an active role regulating prediction markets.

"Prediction markets are exactly one thing where there's overlapping jurisdiction potentially. That is a huge issue we're focused on. ... It's mostly, at least currently, on the CFTC side," Atkins said.

"We recognize that innovative ETF products often require additional review, particularly around liquidity, market structure, and investor protections. Our priority is making sure investors are comfortable with how these products work and understand the role they can play within a regulated ETF structure," Will Rhind said.

"With any kind of novel exposure in the ETF, there will always be some last minute hiccups.

You could replace any new type of asset class and ETF. It's usually the case where things get pushed back a bit," Todd Sohn said. "Are prediction markets being manipulated? The ETF wrapper is proven.

It works, it is convenient, it's transparent. " "I think all systems go, until I see otherwise on the SEC website," Todd Sohn added. " This week Kalshi announced it had raised another $1 billion from investors at a $22 billion valuation.

Kalshi's $22 billion valuation doubled its valuation from six months ago. Over the past six months, Kalshi's institutional trading volume increased 800 percent, and its annualized trading volume grew from $52 billion to $178 billion. Donald Trump Jr.

Is an adviser to both Kalshi and Polymarket. Donald Trump Jr. is affiliated with a firm that has an investment stake in Polymarket. "At the very least, they want to better understand what the impact of these ETFs may be on retail customers," Anthony Capozzolo wrote.

"ETFs have a long history of pushing boundaries to open up access to new investments and asset classes," Nate Geraci wrote. "This delay demonstrates that even with a more lenient SEC, it is not simply greenlighting every ETF filing that comes across its desk," Nate Geraci wrote. Cnbc reported that the eventual approval of spot bitcoin ETFs required legal fights and political pressure.

From the outside it remains difficult to know what specific issues must be resolved or how long the delay will last.