The U.S. Securities and Exchange Commission has initiated a formal public comment period for proposed prediction market exchange-traded funds, signaling a cautious approach to this novel asset class. Bloomberg Intelligence ETF analyst Eric Balchunas reported the move, noting that the SEC is actively deliberating whether to authorize funds tied to event-based contracts.
SEC Chair Paul Atkins confirmed the agency will seek public input on what he described as "novel products," stating that the filings raise regulatory questions requiring further review. The affected applications include PredictionShares ETFs filed by Bitwise Asset Management in February, as well as similar offerings from Roundhill Investments and GraniteShares. These products would track outcomes of U.S. elections and other event-based contracts, allowing traditional investors exposure through standard brokerage accounts.
Balchunas compared the process to the SEC’s earlier handling of cryptocurrency ETFs, emphasizing that regulators want clearer guardrails before approving products tied to binary event outcomes. The timeline for a decision could extend well into 2026.
The SEC’s caution unfolds against a backdrop of legal disputes. The Commodity Futures Trading Commission sued Minnesota after Governor Tim Walz signed legislation to ban prediction markets from August 1, arguing it conflicts with federal oversight. Meanwhile, platforms like Kalshi and Polymarket continue to face state-level scrutiny over whether event contracts constitute unlawful gambling. Monthly trading volumes across prediction markets now regularly exceed $15 billion, reflecting growing interest from the crypto sector.
