SEC Faces Opposition from Crypto Firms Over Novel ETF Regulations

The SEC's recent consultation on novel exchange-traded funds (ETFs) has sparked opposition from prominent crypto firms, including Grayscale Investments, venture capital firm a16z, and the Crypto Council for Innovation.

In separate letters dated August 31, these organizations urged the SEC to avoid imposing uniform restrictions on 'novel' ETFs. They argued that products involving crypto assets, private investments, leverage, and event contracts present different risks and should not be regulated as one category.

a16z proposed assessing each product according to its economic structure and underlying risks, rather than automatically treating them as investment companies under existing federal law.