SEC implements monthly reporting requirement for mutual funds and ETFs

The U.S. Securities and Exchange Commission (SEC) just dropped a bomb on the investment world. Starting soon, mutual funds and exchange-traded funds (ETFs) are required to spill the beans about their portfolio holdings every single month. 

That’s right—no more waiting around for three months just to see what’s under the hood. The SEC has said that this rule change is all about giving investors a clearer picture of what’s going on in their investments.

The regulator actually had bigger plans in mind but decided to pull back. Initially, they were talking about some heavy-duty “swing pricing” regulations. But after a lot of pushback from Wall Street bigwigs, they decided to dial it back and stick to what they could actually get through.

Instead of those harsher rules, they’re now just giving some advice on how to deal with the rules that are already out there.

New rules will bring more problems

So, what does this all mean? For starters, the five-member SEC Commission voted 3-2 along party lines. Not everyone is on board with this. The Republicans on the Commission weren’t exactly thrilled, arguing that the cost to the funds would outweigh any benefits for investors or even the SEC itself. 

They’re worried that this is just another layer of red tape that’s going to cost more money and give more headaches. But SEC Chair Gary Gensler is having none of that. He’s pushing hard. 

Gensler claims that getting a monthly update on holdings will help investors keep a closer eye on what they own and avoid any unwanted surprises. In his own words:

“Lest we need any reminders, the past few years have brought disruptions in markets, reacting to the start of COVID-19, wars abroad, and major bank failures.”

What it means for Bitcoin and Ethereum ETFs

Now, let’s talk crypto because that’s what we’re all here for. The new rules also mean more frequent reporting for ETFs that hold Bitcoin and Ethereum. This is actually kind of a big deal. Investors in these crypto ETFs will get a better idea of what’s going on inside these funds. 

No more waiting around for months to find out if your fund manager went on a bitcoin buying spree or dumped all their ethereum. You’ll get the lowdown every month, which is pretty useful in a market that moves as fast as crypto does.

The SEC’s new rules are set to kick in by November for most funds, but they’re giving the smaller guys—those with less than $1 billion in assets—a bit more time. They’ve got until May 2026. 

And let’s be honest, this could be a real problem for smaller ETFs. They’re going to have to overhaul their reporting systems and that’s not cheap or easy. They might find themselves struggling to keep up with these new demands.

And here’s something to think about: the SEC’s new rules could make them a bit gun-shy when it comes to approving new crypto ETFs. It’s all about reducing risk, but it might also mean fewer options for investors who are looking to get into crypto through an ETF.