The cryptocurrency industry pushes the U.S. Securities and Exchange Commission to limit sweeping rul

The U.S. SEC is weighing how to regulate a new wave of "new" exchange-traded products, and major crypto investors oppose a "one size fits all" approach

The U.S. Securities and Exchange Commission (SEC) is studying how to regulate the next wave of "new" exchange-traded products (ETP), while major crypto investors oppose such a "one size fits all" regulatory approach. In public comments filed at the end of August, venture capital firm a16z, digital asset investment manager Grayscale and the Innovation Cryptography Commission (CCI) urged regulators to retain existing classification standards and review them based on the risk characteristics of specific products, rather than grouping all new products into a new regulatory category.

The submissions were filed as the SEC drew to an end on June 30, a 60-day window for public comment on whether current rules were sufficient to cover new ETFs and whether changes were needed to the approval and registration process. Commentators generally agree that the SEC should avoid imposing sweeping restrictions that could inadvertently force funds that hold certain assets that would otherwise not have to comply with other standards to bear more requirements under the Investment Company Act of 1940.

Core Points

• Case-by-case risk assessment: Crypto companies want to conduct a case-by-case risk assessment for "new" ETF structures rather than setting category limits.
• Oppose classification changes: a16z, Grayscale and CCI oppose changing the classification of investment companies because it may automatically include certain non-securities positions within the Investment Company Act framework.
• Supports predictable review paths: All three parties support a more transparent review process, including coordination between fund registration and exchange listing processes.
• Terminology differences: Commentators are divided on ETF terminology-a16z links labeling to the legal structure of the Investment Company Act, while Grayscale focuses on the economic characteristics of the product.
• Disclosure requirements: CCI calls for clearer disclosure information rather than radical changes in approval methods.

Why the SEC's review of "new ETFs" is crucial

The SEC launched a consultation process on June 30 to ask whether existing ETF-related regulations are adequate to deal with new products and whether the agency should change the way such funds are registered and listed. This is of great significance to crypto market participants because the ETF/ETP framework can strongly affect the issuer's access to funds, liquidity and compliance burden.

In the submission submitted on August 31, the industry's message remained consistent: regulatory efficiency should be improved without reducing the level of investor protection, while avoiding new trigger requirements that may delay product launches. The SEC's request was not just about how to deal with a single issuer or product, but sought general guidance on whether the conceptual boundaries of ETF eligibility should be rewritten and how quickly new structures should be reviewed.

"Avoid Category Restrictions"-Common Warning to the SEC

In the three opinion letters, the core appeal is to prevent blanket restriction on "new" exchange-traded funds. a16z believes that cryptocurrency-based ETPs are now operating within a more mature market infrastructure, including exchange listing standards and established disclosure requirements. In his view, this maturity makes it inappropriate to confuse these products with funds that may hold private assets or employ other truly experimental strategies.

Grayscale's position also emphasizes continuity: it states that digital asset products with established compliance and disclosure practices should not be forced to include new portfolio restrictions or new disclosure regimes simply because they are described as "new." At the same time, CCI said the SEC should work to achieve regulatory efficiency between ETFs and non-ETF exchange-traded products, while retaining the investor protections that are already embedded in the current approach.

All three commentators also opposed changing the classification of investment companies in a way that would automatically include holdings of non-securities products within the framework of the Investment Company Act. This is not just technical. The framework of the Investment Company Act will have a substantial impact on fund operations, document preparation and approval speed. As a result, commentators argue that the SEC should ensure that any additional burdens are associated with specific risk characteristics, rather than just based on labels.

Different paths to clarity: classification, procedures and terminology

While the three letters agreed on resisting category regulatory shifts, they did not fully agree on how to achieve clarity. One significant difference is what qualifies as an "ETF". a16z proposed that the term "ETF" should be used exclusively by funds operating under the Investment Company Act of 1940. In contrast, Grayscale believes that an "ETF" should describe the economic characteristics of a product, regardless of the specific legal structure used to build the product.

In addition to terminology, commentators also made procedural suggestions. a16z requires the SEC to coordinate reviews of fund registrations and exchange listings and adopt a more predictable timetable, reflecting industry concerns that current processes may create unnecessary uncertainty as products pass through multiple regulatory stages.

Grayscale and CCI support an optional non-public pre-submission process. In practice, the idea is that issuers can reduce friction by engaging with regulators earlier before making a public filing, while still benefiting from a normal review cycle.

CCI's recommendations focus on disclosure rather than framework overhaul. It urged the SEC to create clearer "registration status" disclosures, arguing that investors should better understand the regulatory landscape for a given product without having to force drastic changes to the approval framework itself.

Possible next step for the SEC to draw

The SEC is seeking feedback on whether existing rules are sufficient and whether processes need to be changed. Based on the comments received, the industry appears to be offering regulators a path that starts with segmentation: treating products based on underlying risk parameters, rather than imposing one-size-fits-all categories for all "new" offers.

However, differences over ETF terminology suggest broader uncertainty that the SEC still needs to resolve: whether regulators want to anchor categories in legal form or in investors 'perceptions of the product's economic experience. Even if the SEC adopts risk-based review standards, the way it labels products may affect how exchanges and issuers design and market future products, and how investors interpret regulatory equivalence.

The next signal to watch for investors and market observers is how the SEC responds to these competing suggestions as it transitions from the public opinion stage to any proposed policy revisions. Until then, issuers may continue to adjust their filing strategies to emphasize established disclosure/compliance records and attempt to reduce review uncertainties through procedural approaches such as pre-filing participation.

As the SEC weighs whether its "new ETF" framework should change--and if so, how--readers should pay close attention to whether regulators will clarify that investor protection and review rigour will be preserved without automatically expanding the scope of the Investment Company Act, and whether any final guidance addresses the practical issue of timing and transparency of product registration status.