SEC Opens 60-Day Window on Novel ETFs and Prediction Markets

The U.S. Securities and Exchange Commission opened a 60-day public comment period on novel ETFs on Tuesday, formally asking market participants whether exchange-traded funds built on prediction markets, cryptocurrencies, and other non-traditional assets even qualify as investment companies under the Investment Company Act of 1940.

The request is the regulatory follow-through to a pause that began in May, when the agency intervened at the last minute to stop 24 prediction-market ETF filings from going effective by default. The SEC said it would accept comments for 60 days following publication in the Federal Register before deciding on next steps. In a statement accompanying the release, SEC Chairman Paul S. Atkins framed the exercise as a search for the right rules of the road.

Innovation in exchange-traded funds depends on a consistent, transparent, and efficient regulatory framework. The Commission’s request for comment seeks input from the public on how the U.S. ETF market can continue to grow and innovate while serving investors effectively.

Brian Daly, director of the SEC’s Division of Investment Management, pointed to the scale of what is now at stake. ETF assets have grown from $4 trillion in 2019 to over $12 trillion at the end of 2025, he said, and the products under review will define how that growth continues. The SEC’s June 30 press release on novel ETFs sets out the questions the agency wants answered.

Why Prediction Market ETFs Are the Trigger

Prediction-market ETFs are the filings that forced this review. Roundhill Investments, Bitwise, and GraniteShares each filed in February 2026 for funds that would track event contracts on platforms such as Polymarket and Kalshi, covering political outcomes, recession calls, and macroeconomic data. The proposed portfolios ranged from Roundhill’s six funds tied to presidential, Senate, and House races to Bitwise’s PredictionShares brand, which spans both political and macroeconomic outcomes.

The underlying contracts are yes/no bets on real-world events, and the platforms themselves have grown fast. According to The Block, Polymarket and Kalshi collectively surpassed $25 billion in monthly trading volume in April 2026, fueled in part by federal regulatory support. Kalshi, the CFTC-regulated exchange that absorbed most of the U.S. event-contract flow, raised $1 billion in a Series F in May at a $22 billion valuation, led by Coatue, with the company telling investors that institutional trading volume had risen 800% in six months and annualized volume had grown from $52 billion to $178 billion.

That growth is exactly what worries the SEC. Bitwise’s own filings warned that investors could lose “substantially all” of their investment if the outcome goes against them, a risk profile that does not map onto long-only equity or fixed-income funds. InvestmentNews on Atkins’ caution signal walks through how the agency reached the point of asking for public input. Atkins himself spelled out the trouble on CNBC’s Squawk Box earlier in the year, framing it as the core of the SEC’s identity: investor protection and a focus on market manipulation are “very important to me and obviously to the SEC. That is in our DNA.”

The Three Questions the SEC Is Putting to the Public

The release asks three questions, all aimed at whether the 1940 Act framework can govern these products at all.

At the heart of the first question is the so-called Subjective Test under Section 3 of the Act, which turns on whether a fund holds itself out as an investment company and pursues its business as such. The SEC’s release questions whether a fund whose principal strategy targets assets that are not securities can meet that test, and whether the generic listing standards that let qualifying ETFs come to market automatically can apply at all. TD Cowen policy analyst Jaret Seiberg told clients the request looks designed to build a record that could justify policy changes “as soon as 2027,” permitting a broader array of ETFs including event-contract, crypto-asset, and single-stock products. CoinDesk’s read on the policy overhaul details how Seiberg framed the move.

The First-Mover Filing Race and What the SEC Wants to Do About It

The second half of the request is aimed at the filing dynamic that produced the May pile-up. The SEC asked whether competitive pressures are pushing sponsors to file novel ETFs quickly and in rapid succession, and whether that race produces rushed or incomplete filings or funds that never actually launch.

To curb that dynamic, the agency floated two structural ideas:

• A minimum registration fee that issuers could offset against future redemptions, raising the cost of speculative filings.
• A window during which filings stay nonpublic before becoming effective, intended to slow imitative copycats while still letting innovators test ideas.

Neither idea is a proposal. Both are questions put to the public, with the same 75-day window in mind. The Reuters wire on the 60-day comment window notes that the request for comment period runs alongside the broader rethink now under way across the agency’s novel-fund filings.

Why the Automatic 75-Day Clock Is Under the Microscope

The clock that brought the SEC to this point is the generic listing rule itself. Under SEC rules, ETFs that meet certain conditions become effective 75 days after filing unless the agency intervenes, a streamlined path the Commission adopted in 2019 to modernize the fund wrapper.

The 24 prediction-market ETF filings were inside days of that auto-effective window when the SEC stopped them in May. GraniteShares CEO Will Rhind framed the intervention as a process step. “We recognize that innovative ETF products often require additional review, particularly around liquidity, market structure, and investor protections,” Rhind said in a statement to CNBC. “Our priority is making sure investors are comfortable with how these products work and understand the role they can play within a regulated ETF structure.”

The episode has drawn direct comparisons to the years-long fight over spot bitcoin ETFs, which the SEC finally approved in January 2024 after repeated rejections and a federal court loss to Grayscale. Bloomberg Intelligence ETF analyst James Seyffart said the agency appears to be looking for a way to draw a line. “The SEC is obviously not fully comfortable with these filings, or at least not comfortable with opening Pandora’s box to all of what prediction markets offer,” Seyffart said. “I suspect they will be looking for a way to draw a line.” His Bloomberg colleague Eric Balchunas put it more bluntly on X: “The commission is clearly wrestling with these and wants more time and input … want to feel comfortable before they open the barn door.” CNBC’s analysis of the bitcoin-ETF comparison traces how the two fights echo each other. The Atkins SEC, for its part, has not slowed down on every novel fund. The agency recently approved a SEC-approved T. Rowe Price active crypto ETF for NYSE Arca, a step that landed in the same window as the broader pause, and the BlackRock Bitcoin Premium Income ETF proceedings are still working their way through a separate novel-fund review under Atkins.

Crypto Perpetuals, Tokenized Securities, and the Wider Rethink

The novel-ETF request is one piece of a wider regulatory recalibration now running across both Washington financial regulators. On June 26, the SEC and the Commodity Futures Trading Commission issued a joint request for public comment on harmonizing portfolio margining frameworks across securities, security-based swaps, futures, swaps, and related positions, the agencies’ first joint venture of this scope under Atkins and CFTC Chairman Mike Selig. “By further harmonizing our frameworks, we can ensure that jurisdictional overlap does not stifle innovation and efficiency,” Atkins said in the release. “Cross-margining offers a clear opportunity to unlock liquidity that remains frozen in separate accounts.”

Selig took the same line from the CFTC side. “Fostering enhanced cooperation between the CFTC and SEC with respect to portfolio margining promises to unleash untapped capital while ensuring a more robust risk management framework and market protections,” he said. The SEC-CFTC June 26 joint harmonization request sets out the questions on capital, segregation, collateral treatment, and clearing-agency considerations. Atkins has also acknowledged the jurisdictional tangle over prediction markets directly. “Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,” he said in February Senate testimony. “It’s mostly, at least currently, on the CFTC side. But we need to be harmonized in the way we’re addressing these markets.” Alongside all of this, the SEC is still weighing rules for tokenized securities, having delayed earlier guidance on how those assets will operate. Other recent Atkins-era novel-fund moves have moved in the opposite direction. The SEC has cleared a widening lineup of crypto funds since Atkins became chairman in April 2025, moving past the bitcoin and ether products approved under his predecessor to tokens including Solana and Dogecoin. The Grayscale amended NEAR ETF swap to BitGo custody is the kind of structural shift that now reaches market under a streamlined approval path the request for comment may eventually reshape.

Frequently Asked Questions

When does the SEC’s comment period close?

The window runs for 60 days from the date the request is published in the Federal Register. Until that publication date is set, the formal end date is not yet fixed. The June 30 press release confirmed only the 60-day length.

Which prediction-market ETFs are still on hold?

Twenty-four filings from Roundhill Investments, Bitwise, and GraniteShares, all submitted in February 2026 and held up by the SEC in May. Roundhill’s six proposed funds cover presidential, Senate, and House races. Bitwise’s PredictionShares brand spans political and macroeconomic outcomes. None has launched.

Is this the same fight as the spot bitcoin ETF delay?

It is the same regulatory pattern, with one key difference. The SEC approved spot bitcoin ETFs in January 2024 after years of rejections and a federal court loss to Grayscale. The prediction-market ETF request is broader than a single product decision, a public review of whether the 1940 Investment Company Act covers funds whose strategy targets assets that are not securities.

What could change by 2027?

TD Cowen policy analyst Jaret Seiberg told clients the SEC’s request looks designed to build a record that could justify policy changes “as soon as 2027” permitting a broader array of ETFs, including event-contract, crypto-asset, and single-stock products. SEC Chairman Paul Atkins has not committed to a timeline.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. ETF rules and approval timelines are subject to change, and figures cited are accurate as of publication. Readers should consult a qualified financial professional before making investment decisions.