The U.S. Securities and Exchange Commission (SEC) is delaying the launch of new “novel ETFs,” including prediction market ETFs that allow betting on event outcomes. SEC Chair Paul Atkins stated these products raise novel questions and instructed staff to seek public feedback. Several firms, including Bitwise, Roundhill Investments, and GraniteShares, have filed for such ETFs. Prediction markets have seen over $15 billion in monthly trading volume.
The U.S. securities regulator is delaying the launch of a recent wave of novel ETFs to consider their implications. These products include ETFs that allow investors to bet on the outcome of events. SEC Chair Paul Atkins said that “novel products raise novel questions” and instructed his staff to seek public feedback.
Bitwise filed in February for a series of prediction market ETFs under the PredictionShares brand to track U.S. election results. Roundhill Investments and GraniteShares also filed for prediction market ETFs that month.
Prediction markets have become one of crypto’s hottest use cases over the past 18 months. They now consistently record more than $15 billion in monthly trading volume across markets spanning from sports and elections to financial results.
A prediction market ETF would give investors exposure to binary event contracts through a traditional brokerage account. Bloomberg ETF analyst Eric Balchunas said the SEC is clearly wrestling with how to handle the new asset class.
Atkins said ETFs have been a major driver of innovation in the securities markets. He noted that ETF assets have tripled since 2019.
The SEC has shown more flexibility in approving innovative products in recent years. This followed the introduction of a generic listing standard model in September.
