The crypto industry and traditional finance firms are taking opposing positions on how the U.S. Securities and Exchange Commission should handle approvals for crypto exchange-traded funds, with implications for speed, cost, and quality of new investment products.
The SEC recently published industry responses to its request for comment on "Novel ETFs," which include funds holding unusual assets such as cryptocurrencies. Two key debates have emerged: whether ETF filings should remain public during review, and how quickly the approval process should move.
The Confidential Filing Debate
Grayscale and the Crypto Council for Innovation support optional confidential filing periods to reduce what they say are imitative or duplicative registration statements. The SEC has previously noted that "several Novel ETF filings submitted in rapid succession that are largely identical," with AI suspected as a factor in the speed of copycat filings.
Charles Schwab opposes fully confidential filings, arguing that public disclosures allow brokers to prepare investors before new funds launch. However, Schwab suggested a compromise: if confidentiality is introduced, filings should remain public for at least 75 days before becoming effective. The Crypto Council for Innovation is asking the SEC to extend this 75-day mechanism to crypto trusts, which currently have no automatic effectiveness date.
Approval Speed and Product Quality
Grayscale and A16z (Andreessen Horowitz) are calling for shorter SEC review timelines, with Grayscale requesting a 45-day deadline for SEC responses. A16z argues that filings are now submitted electronically with largely templated disclosures and recurring analytical questions, making faster reviews feasible without sacrificing rigor. "The markets these products are designed to access move on a shorter horizon than the current review period," A16z stated in its comments, while emphasizing that speed should not mean "a lighter review."
Jane Street opposes accelerated timelines, contending that rushed approvals could result in lower-quality, less liquid products with wider bid-ask spreads that increase costs for retail investors. Jane Street suggested that extended review periods could encourage ETF sponsors to solicit broader feedback from market makers on fund structure and liquidity.
Current Market Landscape
The U.S. crypto asset ETF market already includes 174 products, according to ETF.com data. The largest is the iShares Bitcoin Trust ETF (IBIT) by BlackRock, which holds approximately $61 billion in assets under management, representing about 38% of all crypto asset ETFs.
The SEC's decision on these framework questions remains pending, with no timeline announced for when the commission will act on the industry comments received.
