SEC giving novel ETFs a rethink as it opens comment period on overhauling U.S. rules

The U.S. Securities and Exchange Commission is reexamining how it approaches novel exchange-traded funds, including those focused on crypto, and is inviting public input on its automated system to activate them.

The agency's new 60-day request for comments — billed as a response to market changes — poses questions about how it allows new ETFs to open to investors, and analysts suggest the SEC is making a case for a wider range of assets trading under such funds, which — unlike products such as mutual funds — can be traded at will on exchanges. One key question: Can an ETF provider that doesn't engage in traditional assets meet a definition as an investment company?

“Innovation in exchange-traded funds depends on a consistent, transparent, and efficient regulatory framework,” said SEC Chairman Paul Atkins in a statement. “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.”