Crypto Industry Urges SEC to Refine Novel ETF Regulations

The US Securities and Exchange Commission (SEC) has received letters from prominent crypto industry participants urging it to avoid blanket restrictions on 'novel' exchange-traded funds (ETFs). Grayscale, a16z, and the Crypto Council for Innovation (CCI) argued that instead of treating novel ETFs as a single category, they should be evaluated based on their individual risk parameters.

The letters were submitted in response to the SEC's request for feedback on its proposal to regulate novel ETFs. The consultation period, which closed on August 30, sought input from stakeholders on whether existing regulations are adequate and how such funds should be regulated.

a16z argued that crypto-based ETPs have developed market infrastructure, including exchange-approved listing standards and established disclosure requirements, and therefore should not be grouped with products holding private assets or using other novel strategies.