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

Securities and Exchange Commission is rethinking ETF policies. (Jesse Hamilton/Coin Desk)Summary Show The U.S. Securities and Exchange Commission may be opening further to novel exchange-traded funds involving crypto and other less traditional assets, issuing a request for comment on potential changes to its ETF policies.The request poses many questions about how the agency allows certain ETFs to list without having to jump through regulatory hoops. 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 approve 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.”