SEC opens comment period on prediction-market and crypto ETFs
The SEC opened a public comment period June 30 on novel exchange-traded fund structures, including funds that would hold prediction-market event contracts and crypto assets. The agency is asking whether these products qualify as investment companies under existing rules. The review follows a May pause on some prediction-market ETF applications and comes as the $16 trillion ETF sector sees disruption from nontraditional underlying assets.
Prediction-market platforms that spent years building inside the CFTC's lighter derivatives regime now face a second front from the SEC. If the agency determines that event-contract ETFs are investment companies, it could pull the underlying contracts into securities regulation and force platforms to restructure or seek dual registration.
The 60-day comment window gives Kalshi and Polymarket a narrow chance to argue for CFTC-exclusive treatment before the SEC establishes precedent. A securities classification would raise compliance costs, slow product launches, and give the CFTC less sole authority in future state preemption fights. The platforms must also watch whether the SEC's inquiry emboldens state attorneys general already pressing parallel actions.