Breaking: SEC Delays Prediction Markets ETF Tied To Polymarket, Kalshi

The U.S. Securities and Exchange Commission (SEC) has postponed the launch of prediction market ETFs tied to Kalshi, Polymarket, and others. It is seeking further clarity before the products can proceed.

SEC Extends Review Period For Prediction Market ETFs

Earlier this year, asset managers such as Roundhill Investments, Bitwise Asset Management, and GraniteShares applied for prediction market ETFs. These ETFs aim at tracking prediction markets like Kalshi and Polymarket, where users can trade on the probability of outcomes in real-life events. It could include elections, economic recessions or even company layoffs.

Although these funds were first supposed to start rolling out this week, the schedule has changed. Regulators have asked for further elaborations on how the products would work and how risks would be conveyed to investors, per a Reuters report.

The delay is a part of the U.S. SEC’s routine check-up system. The current regulations imply that ETF proposals usually become effective within a 75-day period unless the agency takes action. That deadline was approaching hence the new round of scrutiny came up.

Players in the industry indicate that the hiccup might not be an indicator of resistance in the long-term. A source who was involved in the discussions said that the hold-up was only temporary. They added that regulators are still actively conducting discussions with issuers behind the scenes.

Growth of Prediction Markets

The rate of growth in interest in prediction-market products has raced at an accelerated pace in the last one year. Kalshi and Polymarket gained attention as platforms capable of predicting major political outcomes, such as the 2024 U.S. presidential election and Donald Trump.

Their rise has attracted established brokerage companies such as Interactive Brokers and Robinhood. Hence, both of these companies now are looking into the possibilities of expanding access to event-based trading.

On this, Bitwise CIO Matt Hougan remarked, “It’s an area that is maturing rapidly and regulations and oversight are maturing rapidly as well.”

In the meantime, Senior Bloomberg ETF analyst Eric Balchunas also offered his take on the SEC delay. He wrote on X, “Prediction Market ETFs have been delayed by the SEC, according to Reuters. They were slated to start rolling out Thursday but SEC is seeking more info about mechanics and disclosures. Delay is likely temporary, so stay tuned.”

Whilst, Coinbase has sent a letter to the Commodity Futures Trading Commission (CFTC) over prediction market oversight.

For crypto mining, visit our recommendations list on Cloud Mining Platforms.