Crypto Firms Push Back Against SEC Blanket Rules on Novel ETFs

The US Securities and Exchange Commission (SEC) is considering how to regulate 'novel' exchange-traded products, and major crypto investors are pushing back on a one-size-fits-all approach. In public comments posted in late August, venture capital firm a16z, digital asset investment manager Grayscale, and the Crypto Council for Innovation (CCI) urged the regulator to preserve existing classifications and review products based on their specific risk profiles rather than sweeping new products into a separate regulatory bucket.

The commenters broadly agreed that the SEC should avoid blanket restrictions that could inadvertently force additional Investment Company Act requirements on funds that hold assets the SEC would otherwise treat differently. They also supported more predictable review paths, including coordination between fund-registration and exchange-listing processes.

However, the commenters diverged on ETF terminology, with a16z tying the label to the Investment Company Act wrapper and Grayscale focusing on the product's economic characteristics. CCI asked for clearer disclosures rather than radical changes to the approval approach.