$FMKT: Financial Deregulation Is Back in the Conversation
Key Highlights
Recent SEC agenda items and public statements signal a shift toward streamlined regulation and a renewed focus on capital formation and market efficiency.¹
Enforcement priorities appear to be narrowing, with fewer actions tied to technical violations and greater emphasis on cases involving clear investor harm.³⁻⁴
Heavily regulated industries such as financial services, healthcare, energy, and transportation may be particularly sensitive to changes in regulatory intensity.
Investor interest in deregulation themes has increased as policy tone shifts, influencing expectations well before formal rule changes are enacted.
The Free Markets ETF (FMKT) is designed to identify companies with high regulatory cost sensitivity that could benefit if deregulation trends persist.⁶
A Shift in Regulatory Tone at the SEC
After years defined by expanding oversight and increasingly complex compliance frameworks, financial deregulation has re-entered the policy conversation in Washington. Signals from the Securities and Exchange Commission during 2025 suggest a meaningful change in tone, one that places renewed emphasis on capital formation, market efficiency, and innovation rather than rule expansion for its own sake. While this shift remains in its early stages, the implications for corporate behavior, enforcement priorities, and investor positioning are already coming into focus.
The most visible signal came with the appointment of SEC Chair Paul Atkins and the release of the Commission’s 2025 regulatory agenda. The agenda explicitly references deregulatory actions and streamlined disclosure requirements, marking a departure from the rulemaking intensity that characterized prior years.¹ Rather than advancing new layers of reporting mandates, the Commission paused or withdrew a number of pending proposals, including climate- and ESG-related disclosures.² The stated objective was not the abandonment of oversight, but a recalibration toward the SEC’s foundational mandate: facilitating fair, orderly markets while supporting capital formation.²
This reframing matters. Regulatory posture influences corporate decision-making well beyond compliance departments. When firms expect rising disclosure obligations or uncertain enforcement standards, they often delay investment, redirect resources toward legal infrastructure, or avoid marginal projects altogether. By contrast, a more predictable and restrained regulatory environment can lower friction across the economy. The SEC’s recent rhetoric suggests an awareness of these tradeoffs and a desire to reduce regulatory drag without compromising investor protection.
Enforcement Priorities and Economic Implications
Enforcement trends reinforce this interpretation. Data from the first half of 2025 show a notable decline in new SEC enforcement actions compared with the prior year.³ Public statements from the Chair’s office emphasize a narrower focus on cases involving clear investor harm, such as fraud, manipulation, and insider trading.⁴ At the same time, enforcement activity tied to technical or procedural violations has diminished. The practical result is not an absence of oversight, but a more selective approach that prioritizes material misconduct over marginal infractions.
For companies, this shift reduces uncertainty. Enforcement risk is most disruptive when standards appear expansive or inconsistently applied. A regime that concentrates on core violations allows firms to allocate resources more efficiently, focusing on growth initiatives rather than defensive compliance strategies. Market participants appear to be interpreting the SEC’s recent actions as an attempt to restore that balance.
The broader economic implications of such a pivot are significant. Regulatory compliance represents a substantial cost for U.S. businesses, particularly in sectors such as financial services, healthcare, energy, and transportation. Estimates of the aggregate burden run into the trillions of dollars annually, translating into meaningful costs at the firm and household level.⁵ Even modest relief can have an outsized impact on margins, investment activity, and innovation.
How Investors Are Positioning for Deregulation
This backdrop helps explain growing investor interest in deregulation-oriented investment themes. Rather than attempting to forecast individual rule changes, some strategies focus on identifying firms whose economics are most affected by regulatory intensity. The logic is straightforward: if oversight eases, companies with high compliance burdens stand to benefit disproportionately.
One example of how investors are expressing this view is the Free Markets ETF (FMKT), an actively managed U.S. equity fund designed to identify companies that may benefit from deregulation trends.⁶ The strategy emphasizes firms with elevated regulatory cost exposure across sectors such as finance, healthcare, energy, and transportation. Rather than relying solely on sector classifications, the portfolio construction process incorporates analysis of corporate filings and disclosures to identify companies where regulatory relief could influence operating conditions.⁶
From a market perspective, the renewed deregulation discussion underscores a broader point: policy signals matter long before formal rule changes occur. Whether the current shift proves durable remains uncertain, but its reemergence alone is consequential. For investors, regulatory sensitivity is once again becoming a relevant dimension of market analysis.
Consider FMKT. I believe in it. I wouldn’t have launched the fund if I didn’t.
Footnotes
Harvard Law School Forum on Corporate Governance, “SEC’s Spring 2025 Regulatory Flex Agenda Signals a Strategic Pivot,” September 2025.
WilliamsMarston, “SEC in 2025: Regulatory Shifts, Enforcement Trends, and Comment Letter Insights,” 2025.
Intelligize, “Five Critical SEC Enforcement Trends Shaping 2025,” 2025.
Reuters, “Takeaways for SEC Enforcement: Looking Back at FY 2025 and the First Six Months of Chairman Atkins,” October 2025.
ETF.com, “New ETF Eyes Companies Poised for Deregulation Relief,” 2025.
Free Markets ETF, “Fund Overview and Strategy,” 2025.
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Deregulation Strategy Risks.The Fund’s strategy of investing in companies that may benefit from deregulatory measures entails significant risks, including those stemming from the unpredictable nature of regulatory trends. Deregulation is influenced by political, economic, and social factors, which can shift rapidly and in unforeseen directions. Changes in government priorities, political leadership, or public sentiment may result in the reversal of existing deregulatory policies or the introduction of new regulations that could adversely affect certain industries or companies. Further, while the Fund invests in companies expected to benefit from deregulatory initiatives, not all of these companies may achieve the expected advantages, whether fully, partially, or at all. The actual impact of deregulatory measures may vary widely depending on a company’s specific operational, financial, and competitive circumstances. Companies may also face challenges adapting to new regulatory environments, or their competitive positioning may be undermined by other market factors unrelated to deregulation. These risks could negatively affect the performance of the Fund’s portfolio.
Underlying Digital Assets ETP Risks. The Fund’s investment strategy, involving indirect exposure to Bitcoin, Ether, or any other Digital Assets through one or more Underlying ETPs, is subject to the risks associated with these Digital Assets and their markets. These risks include market volatility, regulatory changes, technological uncertainties, and potential financial losses. As with all investments, there is no assurance of profit, and investors should be cognizant of these specific risks associated with digital asset markets.
● Underlying Bitcoin and Ether ETP Risks: Investing in an Underlying ETP that focuses on Bitcoin, Ether, and/or other Digital Assets, either through direct holdings or indirectly via derivatives like futures contracts, carries significant risks. These include high market volatility influenced by technological advancements, regulatory changes, and broader economic factors. For derivatives, liquidity risks and counterparty risks are substantial. Managing futures contracts tied to either asset may affect an Underlying ETP’s performance. Each Underlying ETP, and consequently the Fund, depends on blockchain technologies that present unique technological and cybersecurity risks, along with custodial challenges in securely storing digital assets. The evolving regulatory landscape further complicates compliance and valuation efforts. Additionally, risks related to market concentration, network issues, and operational complexities in managing Digital Assets can lead to losses. For Ether specifically, risks associated with its transition to a proof-of-stake consensus mechanism, including network upgrades and validator centralization, may add additional uncertainties.
●Bitcoin and Ether Investment Risk: The Fund’s indirect investments in Bitcoin and Ether through holdings in one or more Underlying ETPs expose it to the unique risks of these digital assets. Bitcoin’s price is highly volatile, driven by fluctuating network adoption, acceptance levels, and usage trends. Ether faces similar volatility, compounded by its reliance on decentralized applications (dApps) and smart contract usage, which are subject to innovation cycles and adoption rates. Neither asset operates as legal tender or within central authority systems, exposing them to potential government restrictions. Regulatory actions in various jurisdictions could negatively impact their market values. Both Bitcoin and Ether are susceptible to fraud, theft, market manipulation, and security breaches at trading platforms. Large holders of these assets (”whales”) can influence their prices significantly. Forks in the blockchain networks—such as Ethereum’s earlier split into Ether Classic—can affect demand and performance. Both assets’ prices can be influenced by speculative trading, unrelated to fundamental utility or adoption.
● Digital Assets Risk: Digital Assets like Bitcoin and Ether, designed as mediums of exchange or for utility purposes, are an emerging asset class. Operating independently of any central authority or government backing, they face extreme price volatility and regulatory scrutiny. Trading platforms for Digital Assets remain largely unregulated and prone to fraud and operational failures compared to traditional exchanges. Platform shutdowns, whether due to fraud, technical issues, or security breaches, can significantly impact prices and market stability.
● Digital Asset Markets Risk: The Digital Asset market, particularly for Bitcoin and Ether, has experienced considerable volatility, leading to market disruptions and erosion of confidence among participants. Negative publicity surrounding these disruptions could adversely affect the Fund’s reputation and share trading prices. Ongoing market turbulence could significantly impact the Fund’s value.
● Blockchain Technology Risk: Blockchain technology underpins Bitcoin, Ether, and other digital assets, yet it remains a relatively new and largely untested innovation. Competing platforms, changes in adoption rates, and technological advancements in blockchain infrastructure can affect their functionality and relevance. For Ether, the dependence on its proof-of-stake mechanism and smart contract capabilities introduces risks tied to network performance and scalability. Investments in blockchain-dependent companies or vehicles may experience market volatility and lower trading volumes. Furthermore, regulatory changes, cybersecurity incidents, and intellectual property disputes could undermine the adoption and stability of blockchain technologies.
Recent Market Events Risk. U.S. and international markets have experienced and may continue to experience significant periods of volatility in recent years and months due to a number of economic, political and global macro factors including uncertainty regarding inflation and central banks’ interest rate changes, the possibility of a national or global recession, trade tensions and tariffs, political events, war and geopolitical conflict. These developments, as well as other events, could result in further market volatility and negatively affect financial asset prices, the liquidity of certain securities and the normal operations of securities exchanges and other markets, despite government efforts to address market disruptions.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.
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