Grayscale, a16z and CCI urge SEC to avoid blanket ETF limits

Grayscale, venture firm a16z and the Crypto Council for Innovation filed letters with the U.S. Securities and Exchange Commission on Aug. 31 asking the agency not to impose broad restrictions on “novel” exchange-traded funds and products. The submissions were posted by the SEC near the close of a 60-day public-comment period that followed a consultation opened June 30 on the next generation of ETFs.

The groups asked the SEC to evaluate new exchange-traded products on their individual features and risk profiles rather than treating all novel designs as a single category. They urged regulators to preserve existing investment-company classification rules and to avoid changes that would automatically bring products holding non-securities under the Investment Company Act of 1940.

a16z requested that the regulator “evaluate novel products according to their underlying characteristics,” and asked the SEC to coordinate fund-registration reviews with exchange-listing approvals. The firm recommended clearer, more predictable timelines for those processes and said market infrastructure for many crypto-linked ETPs — including listing standards and disclosure practices — has matured enough to warrant case-by-case review.

Grayscale argued that digital-asset funds with established compliance and disclosure histories should not face new portfolio limits or disclosure regimes solely because they are labeled novel. The digital-asset manager supported optional confidential pre-filing consultations to help applicants clarify regulatory expectations before submitting formal applications.

The Crypto Council for Innovation urged comparable regulatory treatment for ETFs and non-ETF exchange-traded products while maintaining investor protections. The council also recommended clearer public disclosure about a product’s registration status instead of restructuring the SEC’s approval framework.

The commenters opposed categorical shifts that could add regulatory requirements, slow approvals or delay product launches without clear benefits to investors. They proposed different procedural routes to speed reviews but consistently emphasized tailored evaluation over blanket restrictions.

The letters showed one clear division on terminology and legal treatment. a16z proposed reserving the ETF label for funds organized under the Investment Company Act of 1940. Grayscale argued that the ETF name should reflect a product’s economic characteristics regardless of its legal wrapper. CCI focused on disclosure of registration status rather than changes to labels.

The SEC’s consultation solicited views on whether current rules are adequate for emerging ETP designs, how such funds should be regulated and whether changes to the registration process are necessary. The submissions from Grayscale, a16z and CCI were among the comments the agency received before the period closed.