$FMKT: What the Latest Court Challenges Mean for Deregulation
Key Takeaways
The SEC has retreated from defending its climate-disclosure rule, signaling a major shift away from the aggressive regulatory posture of prior years.
Court actions, combined with the end of Chevron deference, have made agencies more cautious and pushed regulators toward restraint.
The broader deregulation trend spans energy, financial services, labor rules, and environmental oversight, creating both opportunities and risks for companies.
The Free Markets ETF (FMKT) offers investors a direct way to express a bullish view on deregulation as a multi-sector investment theme.
State-level efforts to impose climate reporting are also running into legal headwinds, leaving no immediate nationwide climate-disclosure framework.
The regulatory climate in Washington has shifted in ways few expected. For more than a year, companies were preparing for the U.S. Securities and Exchange Commission’s (SEC) expansive climate-disclosure regime. The rules would have required public companies to report climate risks, carbon emissions, and related operational impacts. That once-inevitable mandate now appears to be fading. After legal challenges, political turnover, and mounting pressure from several fronts, the SEC has stepped back from defending its own rule. The retreat marks one of the most consequential pivots in recent regulatory history, opening the door to a wider deregulatory wave.
A Rule That Stalled Before It Started
The SEC originally introduced the climate-disclosure framework to illuminate how climate risk could affect corporate performance.¹ It would have compelled disclosures on climate-related risks and, for many companies, greenhouse-gas emissions.² The opposition was immediate. A coalition of mostly Republican attorneys general and the U.S. Chamber of Commerce sued to block implementation, arguing that the SEC was extending securities law into environmental policy.² ³
By early 2025, with litigation piling up, the SEC stayed the rule’s effective date.¹ After the 2024 elections, the agency’s stance shifted decisively. The new SEC leadership notified a federal appeals court that it would no longer defend the rule.¹ The acting chairman called the requirements “costly and unnecessarily intrusive.”¹
Not all commissioners agreed. Caroline Crenshaw criticized the retreat as “policy-making through avoidance,” warning that the agency was abandoning its responsibility.¹ But she was in the minority. For the business community, the message was unmistakable: the SEC’s climate rule had been effectively shelved.
Courts Push Back — And the SEC Steps Aside
The judiciary added another layer of uncertainty. In September 2025, the Eighth Circuit Court of Appeals paused litigation, noting that the SEC itself could not say whether it intended to defend, revise, or repeal the rule.² Judges pointed out that the agency had already delayed implementation, so further delay would not harm challengers.² The court’s decision underscored the unusual dynamic of a regulator reluctant to defend its own regulation.
The broader legal environment also played a role. In 2024, the Supreme Court overturned the Chevron doctrine, a long-standing precedent that allowed agencies wide latitude to interpret ambiguous statutory language.⁴ Without Chevron, agencies must meet a higher burden when issuing expansive rules. The SEC’s climate-disclosure mandate—already stretching the boundaries of securities law—was now even more vulnerable. Facing the possibility of a far-reaching legal defeat, the SEC chose to stand down.⁴
Politics accelerated this retreat. The climate-disclosure rule was developed under the Biden administration, but the 2024 election ushered in a White House committed to scaling back regulations, especially in energy and industrial sectors.⁵ The SEC’s move to stop defending the rule aligned with that agenda.¹ With leadership turnover inside the Commission and new priorities from the Oval Office, the rule quickly lost institutional support.³
Even state-level efforts face uncertainty. California’s own climate-reporting mandates were partially blocked on First Amendment grounds, as courts questioned how far governments can go in compelling detailed climate-related speech from companies.⁶ With both federal and state rules stalled, companies now have no near-term obligation to report climate risks or emissions under a nationwide framework.
A Broader Deregulatory Tailwind
The unwinding of the SEC’s climate rule fits within a much larger deregulatory shift. Critics argue that federal rules impose trillions in hidden costs, functioning like a shadow tax on the economy. One analysis places the cost of federal regulation at more than $2 trillion annually, or roughly $15,000 per U.S. household.⁷ Reducing those burdens, they say, frees up capital, improves productivity, and stimulates growth.
Climate-related rules are at the forefront of the rollback. The Environmental Protection Agency (EPA) has proposed eliminating its mandatory greenhouse-gas reporting rule, which thousands of industrial facilities have followed since 2010.⁵ EPA leaders called the program “bureaucratic red tape” that added compliance costs without meaningful environmental benefits.⁵ If enacted, the change would relieve nearly 8,000 facilities—including refineries, factories, and power plants—from reporting emissions.⁵ The proposal is part of a broader series of climate-related reversals initiated early in the new administration.⁵
The deregulatory philosophy extends beyond environmental policy. Financial, labor, and healthcare rules are all under review. With Chevron deference gone, agencies are increasingly cautious, preferring restraint to rules that could be struck down by courts.⁴ This legal backdrop has created what many investors see as a structural tailwind. A deregulation-focused fund manager has argued that the current political environment “will allow this deregulation process to happen even more speedily.”⁴
Federal agencies have been directed to lighten regulations that could slow infrastructure, energy development, or industrial production.⁸ Permitting has accelerated at agencies like the Department of Energy and the EPA, especially for oil, gas, and nuclear projects.⁸ State regulators appear to be following the trend. A large Southeastern utility recently secured approval to add significant generation capacity without the usual drawn-out regulatory battles, a sign of how regulators may be prioritizing capacity and reliability over process-heavy review.⁸
Deregulation opens opportunities, but not without risk. Reduced oversight can lead to unintended consequences, and political reversals are always possible. A future administration could reinstate rules, leaving companies exposed if they expanded too aggressively under looser standards. Still, the current environment is unmistakably oriented toward lighter-touch oversight.
Positioning for Deregulation: The Free Markets ETF
Wall Street has already begun packaging this theme into investable products. The Free Markets ETF (FMKT), launched in 2025, is the first fund designed explicitly to benefit from regulatory rollback.⁴ ⁷ The ETF invests across sectors, targeting companies positioned to gain from reduced regulatory constraints. As co-manager Michael Gayed has noted, there was no existing fund that treated deregulation itself as an investable theme, so FMKT was created to fill that gap.⁴
FMKT’s holdings reinforce the cross-sector nature of the strategy. The portfolio includes financial firms, nuclear-energy companies, and even allocations to bitcoin and gold, which the fund’s managers view as beneficiaries of a more permissive regulatory environment.⁴ ⁷ Uranium Energy Corp is a notable holding, tied to expectations of relaxed nuclear-industry constraints.⁴ Robinhood Markets is another, reflecting hopes for a friendlier regulatory stance toward fintech.⁴ Regional banks—potential winners if capital requirements ease—also feature prominently.⁴ ⁷ The thread uniting these names is the expectation that reduced regulatory friction can unlock earnings growth.
For investors who believe the deregulatory trend will continue, FMKT offers a way to express that conviction in a single, diversified vehicle.⁷ Still, the risks are real. Regulatory cycles shift, industries evolve, and political winds change. The SEC’s retreat on climate disclosure is a reminder of how quickly policy frameworks can move—creating opportunities for those positioned correctly and hazards for those who are not.⁴
Footnotes
SEC Withdraws Defense of Climate Disclosure Rules, Winston & Strawn.
“US Appeals Court Hits Pause on Challenges to SEC Climate Rule,” Reuters, September 12, 2025.
“Court Orders SEC to Either Defend, Change or Repeal Climate Reporting Rules,” ESG Today, September 16, 2025.
“US Firms Launch ETF to Capitalize on Trump’s Deregulation Push,” Reuters, June 10, 2025.
“US EPA Proposes End to Mandatory Greenhouse Gas Reporting,” Reuters, September 12, 2025.
“U.S. Court Pauses Implementation of California Climate Reporting Law,” ESG Today.
Free Markets ETF – FMKT, Free Markets ETF.
“$FMKT: How Deregulation Could Supercharge Southern Company,” The Lead-Lag Report.
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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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