Crypto Industry Warns SEC Against Blanket Restrictions on New Type ETFs

The cryptocurrency industry is urging the US Securities and Exchange Commission (SEC) to avoid imposing blanket restrictions on new type ETFs, instead evaluating each product based on its individual risk parameters.

Three letters were submitted on August 31st, coinciding with the SEC's 60-day public consultation period as it seeks opinions on regulating new type ETFs. The a16z, Grayscale, and Crypto Innovation Committee (CCI) have all weighed in on the matter.

a16z argues that cryptocurrencies-based ETPs now benefit from more mature market infrastructure, including approved exchange listings and established disclosure requirements, which should exempt them from being treated as one category with private assets or other new strategy products. Grayscale similarly maintains that digitally-asset products with a proven record of compliance and disclosure shouldn't be subject to new investment portfolio conditions or disclosure standards solely because they're classified as 'new type'. CCI suggests achieving comparable regulatory efficiency between ETFs and non-ETF ETPs, while preserving existing investor protection measures.

Industry participants generally reject the possibility of additional requirements or delayed product listings through category-based regulatory adjustments. However, there is disagreement on categorization, approval processes, and terminology.