SEC Seeks Public Comment on Regulatory Rules for "Novel ETFs," Including Crypto Funds and Prediction Market Funds

On June 30, the U.S. Securities and Exchange Commission (SEC) announced that it is seeking public comment on how to regulate "novel ETFs" and whether existing registration processes need adjustments.

The focus of this request for comment is on how to promote innovation in the ETF space while protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.

SEC Chairman Paul Atkins stated in a statement that this public comment solicitation will broadly incorporate suggestions from market participants, exploring pathways for sustainable growth and innovative development of the ETF market, so that the SEC can assess how to adapt to current market dynamics.

SEC Investment Management Division Director Brian Daly added that the ETF market has expanded from $4 trillion in 2019 to over $12 trillion by the end of 2025, with various novel products emerging continuously. Public feedback is crucial for refining long-term industry rules.

This public comment primarily focuses on three areas: whether novel ETFs should be included in the regulatory framework for investment companies, how to optimize supporting rules for innovative ETFs, and potential improvements to the registration process for listing novel products.

Additionally, market observers predict that this comment solicitation may prompt the SEC to allow a broader range of ETF types starting in 2027, including funds based on event contracts, crypto assets, and single-stock strategies.

Notably, the public comment period for this regulatory rule is 60 days, starting from the date the relevant document is published in the Federal Register.

During this period, market participants, industry organizations, and stakeholders may submit written comments on the regulatory framework for novel ETFs, providing input for SEC policy development.

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