Soundings

As we assembled this Monday, we once again found ourselves shaking our heads at the headlines and articles we’d flagged for each other ahead of our meeting.  

At the start of this month, Truth Social, a Trump Media company launched Truth API. Truth API is a paid service that allows subscribers advanced access to posts from the 10 most “influential” accounts on the Truth Social platform. One of those 10 accounts belongs to our President, the other nine are known to those willing to pay somewhere between $60,000 – 100,000 a month to receive that information seconds before it is widely disseminated. According to a Trump Media earnings call, more than10 customers – mostly high frequency trading firms – had signed agreements for the service. Readers familiar with Michael Lewis’ Flash Boys will recall that high frequency traders exploit technological (and proximal) advantages that allow them to process and trade on information ahead of other market participants. High frequency traders are uniquely positioned to monetize the seconds afforded them by seeing Truth Social posts ahead of other investors. 

President Trump frequently posts about foreign and domestic policy – often sharing market shaping information there in lieu of traditional White House or media channels. We know that Trump’s pronouncements move markets. In April 2025, hours after posting that it was a “great time to buy stocks”, Trump shared that there would be a 90-day pause on the implementation of announced tariffs launching a rally in the S&P 500 Index. In March of 2026, stock and Brent crude futures saw a spike in volume after Trump indicated that productive conversations would postpone previewed attacks against Iran. 

The Securities and Exchange Commission (SEC) has defined insider trading as either trading on, or disseminating/tipping, material nonpublic information.  

In a rare rebuke from the White House, longtime teleprompter operator Gabriel Perez left the administration in July following a Commodity Futures Trading Commission (CFTC) investigation into bets Perez made on the prediction market Kalshi based on his pre-knowledge of Trump’s speeches.   

Later this month the SEC will close a 60-day comment period for “novel” exchange traded funds (ETFs) including 24 prediction market ETFs proposed earlier this year based on real-time market event contract values such as those used by prediction markets like Kalshi and Polymarket. These ETFs would price binary outcomes like the 2028 Presidential election in real time.  

Historically the SEC has defined securities as stocks, bonds, options, derivatives, and other investment contracts. The SEC utilizes the Howey Test which requires an investment, a common enterprise, and an expectation of profit from the entrepreneurial actions of a sponsor. Under the Howey Test, a digital currency like Bitcoin, which lacks a common enterprise and whose value is determined by supply and demand dynamics, is not a security. Gold is also not a security. Both are commodities regulated by the CFTC. 

Bitcoin and Gold ETFs are, however, deemed securities, regulated by the SEC as investment contracts between the investor and the issuer. Whether investors can reasonably expect that the issuer will add value through their efforts, satisfying the Howey Test, remains an open question.  

The first gold ETFs launched in the early aughts. The first bitcoin futures ETF launched in 2021. The first bitcoin spot ETF launched in 2024 (after initially being rejected by the SEC in 2022).       

Trading associated with Truth API, and ETFs based on world events and election outcomes, will serve as important tests of how the SEC chooses to rule-make and regulate. Either way, we’ll continue to conduct our own diligence and recommend asset classes and strategies that match the risk and return objectives of our clients.  

Tide Cycle Resources (Tide Cycle) is an investment advisor registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. A copy of Tide Cycle’s Forms ADV Part 2 and Form CRS are available without charge upon request. The opinions expressed are those of Tide Cycle. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Nothing contained in this document may be relied upon as a guarantee, promise, assurance, or representation as to the future. This should not be taken as specific investment advice. We recommend consulting an investment/tax professional before making financial decisions based on any information provided.

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