The US SEC delays approval of the first batch of prediction market ETFs, with over 20 products still awaiting regulatory approval

Odaily Planet Daily News: Regulatory review delays driven by the U.S. SEC have prevented the initial batch of prediction market-related ETF products from launching as scheduled, pushing back the listing timelines of related products. Several institutions, including Roundhill Investments, GraniteShares, and Bitwise Asset Management, submitted over 20 ETF applications related to prediction markets in February this year, covering event-driven products such as election outcomes, economic recessions, tech layoffs, and commodity prices.

According to SEC rules, ETFs typically become effective automatically within 75 days of submission unless the regulator requests further review. The original plan was to launch these products this week, but due to SEC requirements for issuers to supplement product mechanisms and disclosure details, the listing has been delayed. Sources indicate that this delay may be a short-term adjustment. These ETF products usually track the probability of “yes/no” type events through derivative instruments, such as election results or economic indicators, and are linked to prediction market platforms regulated by the CFTC (like Kalshi), where each contract pays $1 if the event occurs, otherwise zero.

Although prediction market trading has recently surged due to increased activity around political events and geopolitical conflicts, it has also raised regulatory concerns about insider trading and market manipulation. Bitwise’s Chief Investment Officer stated that innovative financial products typically require longer regulatory cycles but may ultimately succeed, emphasizing that prediction market ETFs could become a new channel for retail investors to access event trading. (Reuters)