The U.S. Securities and Exchange Commission is studying a more orderly process for ETF approvals as the agency faces a sharp rise in new product filings. According to Bloomberg ETF analyst Eric Balchunas, SEC Investment Management Division official Brian Daly revealed the agency receives about 200 ETF applications each month. Daly made these comments during a Trillions interview, stating the SEC "did a bad job with crypto" and wants to rebuild trust through an "orderly process" for novel products, including prediction market ETFs. The review comes as ETF assets grew from $4 trillion in 2019 to more than $12 trillion at the end of 2025, with the current regulatory process having facilitated explosive growth in the ETF market.
The SEC is also considering confidential ETF filings that would allow some issuers to file products privately before their applications become public. As reported by Bloomberg, this system could protect early ideas and reduce copycat filings. The agency previously raised similar issues in its public review of novel ETFs, asking whether filings should stay confidential for part of the 75-day review period before becoming public. This approach could give applicants more room to develop products without rushing incomplete filings into the market, addressing concerns about the current process that has led to uneven approval cycles.
Prediction market ETFs continue to face regulatory review as the SEC delayed several proposals while seeking public input on how event-based funds should be regulated. As previously reported, Bitwise, Roundhill Investments, and GraniteShares had filed products tied to elections and other event contracts, with the SEC citing the novelty of these products and the need for more information on their mechanics and disclosures before allowing them to go live. The events include the 2026 midterm elections and the 2028 presidential race, making these among the most politically sensitive financial products ever to reach the SEC's inbox. The SEC's official June 30 request asks for feedback on ETFs that invest in innovative assets or use novel strategies.
The current regulatory process has facilitated explosive growth in the ETF market, with assets under management reportedly tripling since 2019. The SEC's request for comments includes 27 questions across three core areas: whether funds holding non-security assets qualify as investment companies under the Investment Company Act, whether Rule 6c-11 still functions correctly for novel holdings, and whether the current 60-75-day automatic effectiveness window provides sufficient review time. The SEC's own filing states directly: "Market participants have raised questions regarding whether novel ETFs with a principal investment strategy to invest in assets that are not securities under the Investment Company Act are investment companies." Existing spot Bitcoin and Ether ETFs continue to trade normally with approval timelines reduced from 240 to approximately 75 days for qualifying digital assets, while approximately 24 event-contract ETF filings were paused in May 2026 as the SEC evaluates new, untested products.
SEC Chairman Paul Atkins emphasized the importance of maintaining a consistent regulatory framework for ETF innovation while framing the review as pro-innovation rather than restrictive. As reported by the SEC, Atkins stated that innovation in exchange-traded funds depends on a consistent, transparent, and efficient regulatory framework. The commission's request for comment seeks input on how the US ETF market can continue to grow and innovate while serving investors effectively. The current leadership has made it a priority to embrace new technologies, especially cryptocurrency, with the agency working on major policies to allow for innovations such as tokenization of securities. The consultation comes as the Commission is simultaneously examining several other areas of digital asset regulation, including earlier coordinated regulatory framework requests for crypto perpetual futures and delayed guidance related to tokenized securities.
