Wall Street Wants Prediction Market ETFs — The SEC Isn’t Ready Yet

TLDR

• The SEC has delayed up to 24 prediction market ETFs from Bitwise, Roundhill, and GraniteShares
• SEC Chair Paul Atkins ordered staff to seek public comment on how to handle “novel” ETFs
• The proposed funds would let investors bet on elections, recessions, and tech layoffs
• Prediction markets hit over $25 billion in monthly trading volume in April 2026
• Investors risk losing “substantially all” of their money if event outcomes go against them

The SEC has paused a wave of prediction market ETFs while it figures out how to handle them. Chair Paul Atkins confirmed the agency is seeking public input before moving forward.

Up to 24 ETFs from Bitwise, Roundhill Investments, and GraniteShares were set to go live in early May. They were nearing the end of a 75-day review window when the SEC put the brakes on.

Atkins said he wants the process to be “transparent and thoughtful.” He instructed agency staff to ask the public how the SEC should respond to the new products.

The ETFs would let investors bet on binary outcomes — things like who wins the 2028 US presidential election, whether a recession hits, or the pace of tech-sector layoffs. Investors could access these bets through a standard brokerage account.

The filings include a clear risk warning. Investors could lose “substantially all” of their money if the event goes against them — a higher risk profile than most ETFs tied to stocks or crypto.

Why the SEC Is Taking Its Time

Bloomberg senior ETF analyst Eric Balchunas described the SEC as “clearly wrestling” with how to handle prediction market ETFs. He compared the situation to the agency’s earlier struggle with spot crypto ETFs, which took years before getting approved in January 2024.

Balchunas said the SEC wants to feel comfortable before it “opens the barn door.”

The delay also comes as prediction market platforms face legal pressure. Kalshi is fighting court challenges in several US states, adding to the uncertainty around the space.

The Market Behind the ETFs

Prediction markets have grown fast. Polymarket and Kalshi together surpassed $25 billion in monthly trading volume in April 2026. The space covers sports, elections, financial outcomes, and cultural events.

Bitwise filed in February for prediction market ETFs under the PredictionShares brand. Roundhill and GraniteShares filed the same month.

A prediction market ETF would offer a new way to access these binary contracts without using a crypto platform. The model follows a path similar to Bitcoin and Ether ETFs, which have pulled in billions in inflows since approval.

What the SEC Has Said About Innovation

Atkins called ETFs a “major driver” of innovation in securities markets. He said ETF assets have tripled since 2019.

The SEC introduced a generic listing standard model in September that replaced case-by-case reviews for new ETF applications. The agency has shown more openness to new products under this framework.

The SEC is also reportedly weighing an “innovation exemption” that would allow tokenized versions of stocks like Apple, Nvidia, and Tesla to trade on crypto networks.

No timeline has been given for when the public comment period will open or when a final decision on prediction market ETFs will be made.

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