Are the Record Flows for Traditional and Crypto ETFs Reducing the Power of the Fed?

Record-breaking flows into exchange-traded funds may be reshaping markets in ways that even the Federal Reserve can’t control.

New data show U.S.-listed ETFs have become a dominant force in capital markets. According to a Friday press release by ETFGI, an independent consultancy, assets invested in U.S. ETFs hit a record $12.19 trillion at the end of August, up from $10.35 trillion at the close of 2024. Bloomberg, which highlighted the surge on Friday, noted the flows are challenging the traditional influence of the Federal Reserve.

Investors poured $120.65 billion into ETFs during August alone, lifting year-to-date inflows to $799 billion — the highest on record. By comparison, the prior full-year record was $643 billion in 2024.

The growth is concentrated among the biggest providers.