El primer mercado de predicción ETF pospone su lanzamiento, Wall Street está observando este negocio.

Original | Odaily Planet Daily (@OdailyChina)

Author | Asher (@Asher_0210)

The first batch of prediction market ETFs did not launch in the U.S. market as originally planned.

At the beginning of this month, due to further review by the U.S. SEC, the initial prediction market-related ETF products failed to take effect as scheduled, and their listing was postponed. The SEC required issuers to supplement product mechanisms and disclosure details, especially how these products track event contracts, handle settlement risks, and explain potential extreme losses to ordinary investors.

Approaching the effective date, the U.S. SEC presses pause

Prediction market ETFs are not a new product that suddenly appeared this month. In February this year, Roundhill Investments was the first to submit relevant documents, followed by Bitwise Asset Management and GraniteShares. The ideas of several issuers are similar, packaging real-world event outcomes into ETF products, allowing investors to trade event probabilities through traditional securities accounts.

The first batch of products initially focused on U.S. political events, including whether the Democratic or Republican candidate would win the 2028 presidential election, and control of the Senate and House of Representatives in the 2026 midterm elections. Subsequently, the scope of applications expanded to event-driven targets such as economic recessions, tech industry layoffs, and commodity prices, with over 20 products under review.

According to relevant rules, these types of ETFs generally can become effective automatically after 75 days of submission unless the SEC intervenes for further review. Because multiple issuers had submitted documents by February, early May became a critical time for the first prediction market ETFs. Previously, Roundhill submitted updated filings, planning for six prediction market ETFs related to U.S. presidential and congressional elections to become effective on May 5. The market initially expected that Roundhill might be the first to launch prediction market ETFs, with similar products from Bitwise and GraniteShares possibly following.

But ultimately, due to SEC intervention for further review, the first batch of products did not become effective automatically.

Postponement “is not a fatal issue,” but rather a move into a more detailed review stage

From the current actions of the U.S. SEC, prediction market ETFs seem more like being asked to clarify and supplement information rather than being outright denied.

If regulators believe such products cannot exist in principle, the market might see a clearer negative signal. But now, the SEC’s actions seem more like requiring issuers to clarify several issues, including how the product obtains exposure to event contracts, how the underlying prices are formed, how event outcomes are settled, how much loss investors might bear, and whether the disclosure documents are sufficiently straightforward.

Bloomberg ETF analyst Eric Balchunas posted on X platform that the SEC’s decision to further review prediction market ETFs appears to be more about the regulator wanting to conduct additional checks on the disclosure documents. Since these products are pioneering, approval would set an important regulatory precedent for prediction market ETFs, so it’s understandable that the SEC is taking more time to review.

The reason the SEC is cautious is because prediction market ETFs are not the same as traditional ETFs. Ordinary industry ETFs buy a basket of stocks, thematic ETFs buy into a particular industry narrative, Bitcoin ETFs track an asset’s price. But prediction market ETFs do not buy assets; they buy whether a certain event will happen. Whether the Democrat wins the 2028 presidential election, whether the Republican controls the Senate, whether the U.S. enters a recession, whether there are large-scale layoffs in the tech industry—these are not traditional assets but real-world events.

The uniqueness of prediction market ETFs is that they look like ETFs, but their underlying is closer to binary event contracts. Ordinary investors might see it in their brokerage accounts and mistake it for a regular thematic fund, but they are trading not a basket of stocks or asset prices, but whether a specific event will occur. A wrong judgment could lead to very direct losses, even approaching zero. The SEC’s request for additional disclosures may be to confirm whether issuers can clearly explain this structure and the associated risks.

The window for listing is still open; rules are the key

Although the launch of prediction market ETFs has been delayed, the market currently tends to interpret this postponement as a review supplement rather than a regulatory shift to denial. Nate Geraci, president of The ETF Store, expressed a somewhat optimistic view. He mentioned that SEC Commissioner Hester Peirce recently spoke about the agency trying to balance regulation and innovation. Geraci believes this statement may relate to prediction market ETFs and that such products could be launched very soon.

Currently, institutions may focus on whether the SEC’s delay is characterized as a disclosure issue or a product attribute issue. However, regardless of which review path the SEC ultimately favors, the prediction market ETF line is unlikely to disappear due to a single delay.

If the issue remains at the disclosure level, the first products might just be launched a bit later; if the regulators continue to question the product’s nature, the process will slow down but will also push the industry to develop clearer rules. For issuers, as long as disclosure standards, settlement requirements, and investor protection boundaries become clearer, subsequent products will be easier to replicate.

More importantly, institutions have already begun designing different levels of products around prediction markets. Directly tracking election, recession, layoffs, and other event outcomes is one line; building prediction market platforms, trading infrastructure, market makers, and data service providers is another. Even if the review cycle for event outcome ETFs lengthens, prediction markets as a financial theme have already been incorporated into ETF issuers’ product pipelines. In other words, Wall Street is not just waiting for a few election ETFs to be approved but is also betting early on the new business of “future events can also be traded.”