Grayscale, 21Shares, a16z, and other companies are urging the U.S. Securities and Exchange Commission (SEC) to expedite the review of exchange-traded funds (ETFs) and to modify the registration process.
In a public comment regarding future regulations, Grayscale proposed allowing confidential submissions of draft documents for exchange-traded products prior to public disclosure. The company believes this change would reduce the incentive for competitors to copy or duplicate applications.
Additionally, Grayscale has requested that SEC staff respond to inquiries within a minimum timeframe of 45 days.
21Shares made similar recommendations. Previously, the SEC had sought feedback from market participants on whether artificial intelligence is contributing to the filing of several largely identical applications for "new" ETFs.
Meanwhile, a16z also called for a reduction in review timelines, citing the use of electronic submissions and the standardized nature of disclosures, as well as the repetitiveness of questions across different products. They emphasized that speeding up the process should not equate to a less thorough examination.
Conflicting Views
In contrast, representatives from Jane Street warned that a race for speed could lead to hasty approvals and limit the time available for market makers to provide feedback on fund structure and liquidity. They recommended that such products be launched with at least two authorized participants.
Charles Schwab opposed a fully confidential process, arguing that if the SEC discusses an application privately with the sponsor, the document should be made public at least 75 days before it takes effect.
Additional Proposals
Some participants have brought forth broader ideas regarding crypto funds. Multicoin Capital suggested allowing liquid staking tokens to be used in spot crypto ETPs, potentially comprising nearly the entire volume of digital assets in the product.
Jito Labs, Jito Foundation, and Solana Policy Institute, in a joint response with Multicoin, urged the SEC to establish rules for the use of staking assets in spot crypto products.
The NYSE requested that the review timelines for new products be made more predictable, as they noted that regulator staff might ask exchanges to delay listings during investigations without providing clear timelines, even when another exchange is undergoing a similar process.
Comments on the SEC's request were to be submitted by August 31, but the regulator has continued to publish materials dated later. So far, the Commission has not outlined any further plans.
It is worth noting that in August, the regulator introduced new rules for the crypto market. The project, titled Regulation Crypto Assets, aims to simplify capital raising through tokens and provides a "safe harbor" for certain digital assets.