The Securities and Exchange Commission has opened a formal review of how it regulates "Novel ETFs," a category covering crypto-asset funds and products tied to prediction markets, publishing a request for comment as release 33-11426.
The filing seeks comment on ways to facilitate innovation in the ETF space while protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation, according to the SEC's filing. The filing notes that the ETF market has grown significantly since the Commission adopted Rule 6c-11 in 2019 — the exemption that lets most ETFs launch without a bespoke exemptive order — a rule the agency credits with fostering greater competition, innovation and investor choice in the ETF space. Comments are due within 60 days of Federal Register publication.
The review follows a May 20 statement from SEC Chair Paul Atkins, who said fund sponsors had voluntarily delayed the launch of "a number of novel ETFs, including event contract ETFs" while the agency weighed the implications. Atkins said ETF assets had tripled since 2019 and that he had "instructed the staff to seek input from the public on how the Commission should respond to recent market changes."
