SEC Told Not to Stifle Digital Asset ETP Innovation with One-Size-Fits-All Rules

The Securities and Exchange Commission (SEC) has asked for comments on its approach to regulating novel exchange-traded products, particularly those related to digital assets. In response, three prominent industry players, Grayscale Investments, Andreessen Horowitz (a16z), and the Crypto Council for Innovation (CCI), have submitted comment letters urging the SEC to adopt a more nuanced approach.

The collective message from these organizations is that not all new ETPs are created equal, and applying a one-size-fits-all regulatory framework could stifle innovation. Grayscale, which operates one of the largest digital asset fund platforms by assets under management, has a vested interest in this outcome, as it has launched multiple digital asset ETPs, including GBTC and ETHE.

a16z, on the other hand, approached the issue from an innovation perspective, arguing that differentiated review processes could lead to faster approvals without sacrificing investor protections. CCI framed the argument around competitiveness, warning that restrictive regulatory approaches could slow the pipeline of new products while other jurisdictions move ahead.