The largest players in the crypto industry — Grayscale Investments, venture capital giant Andreessen Horowitz (a16z), and the industry alliance Crypto Council for Innovation — have submitted a collective position to the U.S. Securities and Exchange Commission (SEC), demanding a departure from the template-based approach to regulating new exchange-traded products.
The essence of the appeal is that the SEC should not mechanically lump all new ETFs into a single category and apply the same restrictions to them. Each product, in my firm belief, must be evaluated individually — based on its internal structure, underlying asset, and specific risks. This is especially critical for instruments that hold not securities but, for example, physical assets or alternative digital tokens.
The companies' key thesis is the inadmissibility of automatically extending the provisions of the Investment Company Act of 1940 to products whose assets are not securities. This creates a legal conflict where classic rules designed for equity funds are being stretched to fit a completely different economic model of crypto ETFs.
As constructive proposals, market participants put forward two important points. First, establishing more predictable and clear timelines for reviewing applications to avoid months-long delays and administrative fog. Second, implementing a mechanism for confidential pre-clearance that would allow issuers to discuss the product structure with the regulator before the official filing, minimizing the risks of public rejections.
My expert assessment: this is a timely and strategically sound move by the industry. The market has already outgrown the era when every new ETF was perceived as an experiment. If the SEC continues to apply outdated templates to innovative products, it will not only slow down the sector's development but also push issuers to register in more favorable jurisdictions. A case-by-case approach is the only path to creating a healthy and competitive digital asset market in the United States.