The US Securities and Exchange Commission (SEC) is weighing how to regulate the next wave of “novel” exchange-traded products, and major crypto investors are pushing back on a one-size-fits-all approach. In public comments posted in late August, venture capital firm a16z, digital asset investment manager Grayscale, and the Crypto Council for Innovation (CCI) urged the regulator to preserve existing classifications and review products based on their specific risk profiles rather than sweeping new products into a separate regulatory bucket.
The submissions were filed around the close of the SEC’s 60-day public comment window following the agency’s June 30 request for feedback on whether current rules adequately cover novel ETFs and whether the approval and registration process should be changed. The commenters broadly agreed that the SEC should avoid blanket restrictions that could inadvertently force additional Investment Company Act requirements on funds that hold assets the SEC would otherwise treat differently.
Key takeaways
- Crypto firms want product-by-product risk review rather than categorical limits on “novel” ETF structures.
- a16z, Grayscale, and CCI oppose sweeping changes to investment-company classifications that could automatically pull some non-securities holdings into the Investment Company Act framework.
- All three supported more predictable review paths, including coordination between fund-registration and exchange-listing processes.
- The commenters diverged on ETF terminology—a16z ties the label to the Investment Company Act wrapper, while Grayscale focuses on the product’s economic characteristics.
- CCI asked for clearer disclosures rather than radical changes to the approval approach.
Why the SEC’s “novel ETF” review matters
The SEC opened its consultation on June 30, asking whether existing ETF-related regulations remain sufficient for novel products and whether the agency should alter how such funds are registered and listed. That matters to crypto market participants because ETF/ETP frameworks can strongly influence capital access, liquidity, and the compliance burden for issuers.
In their comments dated Aug. 31, the industry’s message was consistent: regulatory efficiency should improve without lowering investor protections—or creating new, automatically triggered requirements that could slow down launches. The SEC’s solicitation did not simply concern how to treat a single issuer or product; it sought general guidance on whether the agency should rewrite the conceptual boundaries for what qualifies as an ETF, and how quickly it should review new structures.
“Avoid categorical restrictions” — a shared warning to the SEC
Across the three letters, the central push was to prevent a blanket restriction on “novel” exchange-traded funds. a16z argued that crypto-based ETPs now operate within more mature market infrastructure, including exchange listing standards and established disclosure requirements. In its view, that maturity makes it inappropriate to lump these products together with funds that may hold private assets or use other genuinely experimental strategies.
Grayscale’s stance similarly emphasized continuity: it said digital asset products with established compliance and disclosure practices should not be forced into new portfolio restrictions or new disclosure regimes solely because they are described as “novel.” CCI, meanwhile, said the SEC should aim for regulatory efficiency across both ETF and non-ETF exchange-traded products, while still preserving the investor protections already embedded in the current approach.
All three commenters also opposed changing investment-company classifications in a way that could automatically sweep products holding non-securities into the Investment Company Act framework. That point is not just technical. The Investment Company Act framework can materially affect fund operations, documentation, and the pace of approval—so the commenters’ argument is that the SEC should ensure any additional burdens are tied to specific risk characteristics, not labels.
Different paths to clarity: classification, procedures, and terms
Although the letters align on resisting categorical regulatory shifts, they do not fully agree on how clarity should be implemented. One prominent difference concerns what should qualify to be called an “ETF.”
a16z proposed that the term “ETF” should be reserved for funds operating under the Investment Company Act of 1940. Grayscale, by contrast, argued that “ETF” should describe the economic characteristics of a product, regardless of the particular legal wrapper used to structure it.
Beyond terminology, the commenters offered procedural suggestions. a16z asked the SEC to coordinate fund-registration and exchange-listing reviews and to adopt more predictable timelines, reflecting a concern that the current process may create avoidable uncertainty when products move through multiple regulatory stages.
Grayscale and CCI supported optional confidential pre-filing processes. In practical terms, the idea is that issuers could reduce friction by engaging with the regulator earlier—before public filings—while still benefiting from the normal review lifecycle.
CCI’s recommendation focused on disclosure rather than a framework overhaul. It urged the SEC to create clearer “registration-status” disclosures, arguing that investors should better understand the regulatory posture of a given product without forcing a drastic change to the approval framework itself.
Where the SEC could draw lines next
The SEC is seeking feedback on whether existing rules are adequate and whether the process should change. Based on the comments, the industry appears to be offering the regulator a roadmap that starts with segmentation: treat products according to underlying risk parameters instead of a blanket category for “novel” offerings.
However, the disagreement on ETF terminology hints at a broader uncertainty the SEC will still need to address: whether the regulator wants to anchor categories to legal form or to how investors experience the product economically. Even if the SEC adopts a risk-based review standard, the way it labels products could influence how exchanges and issuers design and market future offerings, as well as how investors interpret regulatory equivalence.
For investors and market watchers, the next signal to watch is how the SEC responds to these competing recommendations as it moves from public comment to any proposed policy refinements. Until then, issuers will likely continue calibrating their filing strategies to emphasize established disclosure/compliance records, while attempting to reduce review uncertainty through procedural pathways such as pre-filing engagement.
With the SEC weighing whether its “novel ETF” framework should change at all—and if so, how—readers should monitor whether the agency clarifies that investor protections and review rigor will be preserved without automatically expanding Investment Company Act coverage, and whether any final guidance addresses the practical question of timelines and transparency for product registration status.
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