The Securities and Exchange Commission has delayed a wave of prediction market exchange-traded funds tied to political and economic outcomes that were set to debut this week, according to a Reuters report on Monday.
The pause affects 24 ETFs from issuers including Bitwise, Roundhill, and GraniteShares, while the SEC looks closer at how the products would function and the risks to investors.
Filings from the firms were submitted in February and were nearing the end of a 75-day review window, after which they would become effective under new ETF fast-track rules put in place by the SEC last year.
The proposed funds would give investors exposure to outcomes tied to the 2028 U.S. election, tech-sector layoffs and the likelihood of a recession.
But unlike typical ETFs that track the performance of an asset like bitcoin or a market benchmark like the S&P 500, these funds are structured to behave more like the binary yes-or-no outcomes on prediction market platforms like Polymarket and Kalshi.
This makes them inherently riskier, with many of the filings warning that investors could lose “substantially all” of their investment if the outcome goes against them.
Prediction market battleground
The delays come amid infighting between lawmakers in Washington DC that has extended into a federal versus state battle over jurisdiction.
The Commodity Futures Trading Commission sued multiple states last month, arguing that event contracts fall under its “exclusive jurisdiction,” while state officials have pushed back, saying the offerings constitute unlicensed gambling.
Venture firm a16z argued in favor of the CFTC on Friday, warning that a patchwork of state-level restrictions could “severely circumscribe” liquidity and limit access for users.
Lawmakers are also zeroing in on insider trading risks associated with prediction markets. The Senate last week moved to bar members from trading on prediction markets, citing concerns that nonpublic information could be used to place bets.
Despite the noise, Bloomberg ETF analyst Eric Balchunas said the delay is likely temporary, adding investors should “stay tuned” as regulators continue to review the products.
Polymarket and Kalshi have turned what was a niche market into a massive business, clocking a combined $85 billion in volume in just the first four months of 2026, according to The Block’s data.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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