US SEC opens public comment on novel prediction‑market exchange‑traded funds

The U.S. Securities and Exchange Commission has issued a request for public comment on a new class of exchange‑traded funds that invest in innovative asset classes and strategies, specifically event‑contract ETFs that track prediction markets. Over two dozen filings from Roundhill Investments, GraniteShares and Bitwise, seeking to link fund performance to outcomes such as the 2026 midterm elections or the 2028 presidential race, have been placed on hold pending the comment period. The SEC is examining whether these funds should be treated as investment companies, how existing listing standards apply, and what disclosure, suitability and liquidity safeguards are needed. Regulators also asked whether competitive pressures could drive rushed filings and whether a minimum registration fee or non‑public filing period might mitigate that risk. The move follows broader ETF market growth, including earlier approvals of crypto ETFs, and reflects concerns about investor protection, market integrity and the practical mechanics of pricing and redeeming funds tied to binary events.