The largest players in the cryptocurrency market—Grayscale, Andreessen Horowitz (a16z), and the Crypto Council for Innovation—have submitted a collective position to the U.S. Securities and Exchange Commission (SEC) that questions the feasibility of unified regulation for all new exchange-traded products (ETPs). Instead of template-based restrictions, they insist on a detailed analysis of each instrument, taking into account its internal architecture and risk profile.
The industry's key argument is that mechanically extending rules designed for traditional investment companies to products whose underlying assets are not securities would distort market competition and stifle innovation. Such an approach, in my view, ignores the fundamental difference between, say, an ETF based on physical bitcoin and structures backed by derivative instruments—their operational and counterparty risks are incomparable.
Specific proposals: speed and confidentiality
The appeal also raises the issue of predictability in the regulatory process. The companies suggest that the SEC implement clear timeframes for reviewing applications, as well as legalize a mechanism for confidential pre-approval of documentation before official submission. This would allow issuers to avoid public mistakes and adjust product structures without reputational damage, which is especially critical in the volatile digital asset market.
The market participants' position is quite rational: attempting to squeeze the diversity of crypto products into the Procrustean bed of old norms would only create legal uncertainty. However, from my expert perspective, the SEC is unlikely to go for full individualization—this would overload its resources. A more realistic scenario appears to be a compromise: creating a limited number of ETP categories with differentiated requirements, but without a rigid link to the status of the underlying asset as a security. The battle for flexibility is just beginning, and its outcome will determine how quickly the U.S. market can absorb new waves of institutional capital into the crypto sphere.