Key facts
- Crypto firms, asset managers, and consumer advocates submitted comments to the SEC regarding novel ETFs.
- Industry groups like CCI, Grayscale, and a16z urged the SEC to avoid blanket restrictions on new exchange-traded products.
- They advocated for evaluating products based on individual assets, risks, and characteristics.
- Firms proposed extending regulatory efficiencies similar to ETFs to other exchange-traded products (ETPs).
- Disagreements arose regarding event contracts, confidential filings, staking, and retail investor protections.
Crypto industry participants, including Grayscale, a16z, and the Crypto Council for Innovation (CCI), have urged the U.S. Securities and Exchange Commission (SEC) to refrain from imposing blanket restrictions on novel exchange-traded products (ETPs). Instead, they advocate for evaluating such products based on their individual risk parameters and underlying characteristics, rather than applying a one-size-fits-all approach.
In letters submitted on August 31, these firms proposed different routes for clearer and faster reviews. The CCI asked the agency to extend regulatory efficiencies available to ETFs registered under the Investment Company Act of 1940 to other ETPs, noting that many spot crypto products use commodity-trust structures. A16z suggested that the SEC coordinate fund-registration and exchange-listing reviews and adopt predictable timelines, arguing that crypto ETPs already operate under existing exchange listing standards and disclosure requirements.
However, disagreements emerged on specific aspects. Grayscale opposed new portfolio restrictions for established digital-asset products, while Charles Schwab opposed a fully confidential filing process. Prediction market Kalshi argued for the eligibility of event contracts in registered funds, but consumer advocacy group Public Citizen warned that event-contract ETFs could mislead retail investors into believing they are traditional investment vehicles.
The SEC, which opened a 60-day comment period in June, must now determine whether these novel products require a common regulatory framework or separate rules based on their structures and risks.