Key Takeaways:
The U.S. Securities and Exchange Commission is rethinking how it approves exchange-traded funds tied to crypto assets and prediction markets, opening a 60-day comment period that could broaden the types of assets eligible for ETF wrappers.
The SEC on June 30 issued a request for comment (Release No. 33-11426) seeking public input on potential changes to its framework for novel ETFs, including those focused on crypto assets, event contracts and single-stock strategies. The agency's move follows a wave of filings for event contract ETFs — funds built around prediction market outcomes — that prompted the SEC to pause their automatic effectiveness in May.
"Innovation in exchange-traded funds depends on a consistent, transparent, and efficient regulatory framework," SEC Chairman Paul Atkins said 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."
The current streamlined process allows ETFs meeting certain conditions to launch without filing a formal exemption request, a mechanism that has helped fuel explosive growth in the sector. Total ETF assets under management rose to $12 trillion in 2025 from $4 trillion in 2019, according to SEC data. The comment period, which runs for 60 days, poses questions about whether ETF providers that invest primarily in assets that are not securities under the Investment Company Act can still qualify as investment companies.
What the SEC is asking
The SEC's request specifically asks whether novel ETFs with a principal investment strategy focused on non-security assets — such as crypto tokens or prediction market contracts — meet the definition of an investment company under the Investment Company Act of 1940. The agency also seeks input on the time period in which ETFs become effective and what disclosures must be provided during that process.
The question carries significant implications for the crypto industry. If the SEC determines that crypto-focused ETFs can proceed under the streamlined framework without requiring individual exemptive relief, it could open the door to a broader range of digital asset funds reaching the market more quickly. Currently, spot bitcoin ETFs trade on U.S. exchanges after the SEC approved them through its accelerated process in early 2025, but the regulatory path for funds holding other crypto assets remains less clear.
"It is designed to build a record that could be used to justify policy changes in the future that would permit ETFs focused on a broader universe of assets," Jaret Seiberg, a policy analyst at TD Cowen, said in a note to clients. He said the broader range could include "those based on event contracts, crypto assets and single-stock strategies."
Event contract ETFs hit pause
The SEC's decision to seek public comments comes two months after it delayed the effectiveness of more than two dozen event contract ETFs filed in February 2026 by Roundhill Investments, GraniteShares and Bitwise. Those funds would allow investors to take positions on outcomes including the 2026 midterm elections and the 2028 presidential race, with payouts structured as binary events — investors could lose their entire investment if the predicted outcome does not occur.
The SEC is coordinating with the Commodity Futures Trading Commission on the review, reflecting the overlapping jurisdiction over prediction market products. The agency cited the novelty of the products and the need for more information on their mechanics and disclosures before allowing them to go live.
Atkins' SEC has made digital asset policy a priority, working on major rules to allow for innovations such as tokenization of securities. The ETF comment period represents another front in that effort, with the potential to reshape how crypto and other non-traditional assets reach retail and institutional investors through regulated fund structures.
This article is for informational purposes only and does not constitute investment advice.
