SEC novel ETF review draws opposition from crypto firms

Grayscale Investments, venture capital firm a16z and the Crypto Council for Innovation urged the U.S. Securities and Exchange Commission (SEC) to avoid imposing uniform restrictions on “novel” exchange traded funds. Summary Grayscale, a16z and CCI urged the SEC to assess novel products using individual risk characteristics. All three opposed automatically treating products holding nonsecurities as investment companies under existing federal law. A16z requested coordinated registration and exchange reviews, alongside clearer timelines for prospective ETF issuer applicants. Grayscale and CCI supported optional confidential prefiling discussions to identify regulatory concerns before public submissions. SEC’s consultation closed August 31 without creating a rule, decision deadline or automatic product restriction. The three organizations submitted separate letters dated Aug. 31, the final day of a 60 day SEC consultation. They argued that products involving crypto assets, private investments, leverage and event contracts present different risks and should not be regulated as one category. The SEC opened the consultation on June 30. It requested feedback on investment company classific...