U.S. Regulators Send Mixed Signals on Prediction Market Growth
The SEC delayed approval of 24 prediction market ETFs from firms like Roundhill and Bitwise, citing manipulation and retail suitability concerns. Meanwhile, the CFTC eased compliance for 19 entities including Kalshi and Polymarket, and defended federal authority in a lawsuit against Ohio. Interactive Brokers launched a unified prediction market platform, and Polymarket partnered with Nasdaq Private Market for private-company bets. These divergent actions highlight a complex regulatory landscape as prediction markets gain institutional traction.
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SEC Delays Prediction Market ETFs, Escalating Jurisdictional Battle with CFTC
The U.S. Securities and Exchange Commission (SEC), under Chairman Paul Atkins, has formally delayed the launch of proposed 'Event Contract ETFs' from Roundhill, GraniteShares, and Bitwise, which would allow investors to bet on events like U.S. midterm elections and tech layoffs via standard brokerage accounts. The SEC opened a public comment period, signaling it will apply traditional securities standards to prediction markets. This move intensifies a turf war with the Commodity Futures Trading Commission (CFTC), which has historically regulated prediction markets and recently eased compliance. The SEC cites concerns over valuation of binary contracts, insider trading risks, and retail suitability. Analysts compare the delay to the multi-round SEC review that preceded Bitcoin spot ETF approval. If approved, these ETFs could bring prediction markets from specialized platforms like Kalshi to mainstream brokers like Schwab and Fidelity, creating a new asset class but also regulatory divergence between the two agencies.
News – Finance Magnates | Financial and business newsPolymarket Launches Private-Market Bets as SEC Pauses Prediction Market ETFs
Prediction market platform Polymarket partnered with Nasdaq Private Market to launch event contracts tied to private-company milestones, including IPO timing, valuations, and secondary market activity for firms like OpenAI, Anthropic, Stripe, and Kraken. The move expands access to private-market price discovery beyond venture firms and accredited investors. Simultaneously, SEC Chair Paul Atkins announced the agency will seek public input before approving prediction market ETFs, citing novel regulatory questions. The CFTC and Justice Department also sued Minnesota over what they describe as the first outright state ban on prediction markets. Additionally, Polymarket filed with the CFTC to list parlay-style sports event contracts in the U.S. The developments highlight both the rapid expansion of prediction markets and increasing regulatory scrutiny from federal and state authorities.
Yahoo FinanceSEC Chief Atkins Pauses Prediction Market ETFs, Seeks Public Comment on Novel Fund Structures
SEC Chairman Paul Atkins has instructed agency staff to solicit public comment on novel exchange-traded funds (ETFs) tied to prediction market contracts, effectively pausing the review of approximately 24 filings from issuers including Bitwise Investments, Roundhill Investments, and GraniteShares. The proposed ETFs would give retail investors direct exposure to event contracts—binary bets on outcomes such as the 2028 U.S. presidential election, recession scenarios, and tech-sector layoffs—through standard brokerage accounts. The underlying instruments, offered by platforms like Polymarket and Kalshi, have seen explosive growth, with combined monthly trading volume exceeding $25 billion in April. Fund sponsors have voluntarily delayed effectiveness while the SEC considers implications. Atkins noted that 'novel products raise novel questions,' marking a cautious approach distinct from his predecessor Gary Gensler. No timeline was given for the public comment process.
InvestmentNewsInteractive Brokers Integrates Prediction Markets as SEC Delays ETF Approvals
Interactive Brokers has launched a unified trading platform integrating prediction market contracts from Kalshi, CME Group, and its own ForecastEx exchange, allowing clients to trade events related to economics, climate, and politics. This move signifies deeper integration of prediction markets into traditional brokerage infrastructure. Concurrently, the regulatory landscape shows mixed signals: the CFTC issued a no-action letter easing swap data reporting requirements for fully collateralized event contracts, reducing compliance costs for operators. In contrast, the SEC delayed the approval of 24 prediction market ETFs filed by firms like Roundhill Investments and Bitwise, citing concerns over market manipulation and infrastructure maturity. Market dynamics are also shifting, with Kalshi gaining ground as its monthly volume rose 13% to $14.8 billion following a $1 billion funding round. Meanwhile, competitor Polymarket saw a 9% drop in volume to $10.3 billion, attributed to recent infrastructure overhauls and the introduction of trading fees. These developments highlight the growing institutionalization of prediction markets despite regulatory hurdles.
News – Finance Magnates | Financial and business newsInteractive Brokers Integrates Prediction Markets as SEC Delays ETF Approvals
Interactive Brokers has launched a unified prediction markets platform, integrating contracts from Kalshi, CME Group, and its own ForecastEx exchange. This move allows retail and institutional clients to trade event-based contracts on economics, climate, and politics through a single interface, signaling deeper integration of prediction markets into traditional brokerage infrastructure. Concurrently, the regulatory landscape shows mixed signals: the CFTC issued a no-action letter easing swap data reporting requirements for fully collateralized event contracts, reducing compliance costs for operators. In contrast, the SEC delayed the approval of 24 prediction market ETFs filed by firms like Roundhill Investments and Bitwise, citing concerns over market manipulation and infrastructure maturity. Market dynamics are also shifting, with Kalshi gaining ground as its monthly volume rose 13% to $14.8 billion following a $1 billion funding round. Meanwhile, competitor Polymarket saw a 9% drop in volume to $10.3 billion, attributed to recent infrastructure overhauls and the introduction of trading fees. These developments highlight the growing institutionalization of prediction markets despite regulatory hurdles.
News – Finance Magnates | Financial and business newsSEC Delays Prediction Market ETFs Again as CFTC Backs Sector
The U.S. Securities and Exchange Commission (SEC) has again delayed the approval of the first prediction market exchange-traded funds (ETFs), extending a regulatory pause for products tied to political and economic outcomes. Issuers such as Roundhill, Bitwise, and GraniteShares face continued scrutiny as the SEC reviews disclosures for these groundbreaking retail investment vehicles. Despite this setback, the Commodity Futures Trading Commission (CFTC) provided significant support to the sector. On May 13, CFTC staff issued a blanket no-action letter relieving 19 entities, including Kalshi and Polymarket US, from certain swap data reporting requirements. Additionally, the CFTC filed an amicus brief supporting Kalshi in a legal dispute with Ohio, arguing that the state overstepped federal authority by classifying federally regulated event contracts as unlicensed sports betting. Meanwhile, crypto infrastructure firm MoonPay introduced an AI-powered trading tool to enhance accessibility for non-technical users. These divergent regulatory signals highlight the complex landscape as prediction markets gain traction on Wall Street, with the SEC exercising caution while the CFTC actively reduces compliance burdens and defends federal jurisdiction.
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