Crypto industry urges SEC to avoid blanket novel ETF restrictions

Grayscale, a16z, and the CCI asked the SEC to preserve existing classification rules and avoid treating novel exchange-traded products as a single category, while proposing different routes to clearer and faster reviews.

Crypto industry participants urged the US Securities and Exchange Commission (SEC) to avoid a blanket restriction on “novel” exchange-traded funds (ETFs) and instead evaluate products based on their individual risk parameters.

Venture capital firm a16z asked the SEC to evaluate novel products according to their underlying characteristics, coordinate fund-registration and exchange-listing reviews and adopt more predictable timelines. Digital asset investment manager Grayscale and the Crypto Council for Innovation (CCI) supported optional confidential pre-filing processes.

All three opposed changing existing investment-company classifications in ways that could automatically sweep products holding non-securities into the Investment Company Act framework.

The letters were dated Aug. 31 and posted by the SEC around the close of a 60-day public-comment period on its request for feedback concerning novel ETFs.