Crypto industry asks SEC to avoid broad restrictions on novel ETFs
Major crypto industry players have asked the U.S. Securities and Exchange Commission (SEC) to avoid applying broad restrictions to novel exchange-traded funds (ETFs), which are investment funds traded on stock exchanges. Instead, they argue each product should be evaluated based on its own risks and features.
Industry leaders submit formal feedback
Venture capital firm a16z, digital asset manager Grayscale, and the Crypto Council for Innovation (CCI) submitted letters to the SEC on August 31, near the end of a 60-day public comment period. The SEC had opened the consultation on June 30 to gather input on regulating the next generation of ETFs.
All three organizations opposed changes that would automatically classify products holding non-securities under the Investment Company Act of 1940, a law that regulates investment companies in the U.S.
Key requests from the industry
- a16z asked the SEC to assess novel ETFs based on their underlying characteristics, improve coordination between fund-registration and exchange-listing reviews, and adopt clearer timelines.
- Grayscale and CCI supported optional confidential pre-filing processes to speed up reviews.
- a16z and Grayscale disagreed on terminology: a16z wants the term ETF reserved for funds under the Investment Company Act, while Grayscale believes it should describe economic features regardless of legal structure.
- CCI called for clearer disclosures about registration status rather than major changes to the approval process.
Why this matters
The industry argues that crypto-based ETFs now operate with stronger market infrastructure, including established listing standards and disclosure rules. They say these products should not be grouped with riskier or less transparent investments simply because they are considered novel.
If the SEC imposes blanket restrictions, it could delay product launches or add unnecessary requirements, according to the commenters.
