SEC Review of Novel ETFs Sparks Debate Among Crypto Firms

Crypto firms are at odds over the SEC's review of novel ETFs, which could reshape regulatory boundaries for crypto-linked funds and affect the entire digital-asset market.

Grayscale, a16z, and CCI have filed comments with the SEC on the same day, disagreeing with each other on what these products should be called. They agree that any substantive expansion of the definition would require a legislative amendment by Congress.

The three firms argue that the 1940 Act was designed to regulate pools investing in securities rather than every vehicle pooling investor capital for exposure to an asset. Grayscale and a16z say that investors may be confused when products that are not registered investment companies call themselves ETFs, while CCI supports exploration of the nomenclature problem without endorsing a restriction.