The U.S. Securities and Exchange Commission (SEC) is delaying its decision on a new type of ETF (exchange-traded fund) that allows investors to bet on the outcomes of various events. On Wednesday, SEC Chair Paul Atkins noted that "new products raise new questions" and directed his staff to solicit public comment on these applications, as reported by Cointelegraph.com reports .
In February, Bitwise filed to register prediction market ETFs tracking U.S. election results under the PredictionShares brand. Roundhill Investments and GraniteShares have also applied for similar products. Prediction markets have become one of the most popular trends in the crypto world over the last 18 months, with monthly trading volumes now exceeding $15 billion in areas such as sports, elections, and financial outcomes.
Prediction market ETFs allow investors to access binary contracts through traditional brokerage accounts. This process mirrors the institutionalization path of cryptocurrencies like Bitcoin and Ethereum. Bloomberg analyst Eric Balchunas believes the SEC is struggling with how to regulate this new asset class, similar to the period before the approval of spot crypto ETFs in January 2024.
The decision to delay the applications comes at a time when prediction market platforms like Kalshi are facing legal challenges in U.S. courts. Paul Atkins noted that total ETF assets have tripled since 2019 and serve as a key driver of innovation in the securities market.
Meanwhile, the SEC is also considering creating an "innovation exemption" that would allow for the tokenization of shares, enabling the trading of companies like Apple, NVIDIA, and Tesla on crypto rails. This step is expected to expand trading access for major tech giant shares on non-exchange platforms.
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