Discussion on SEC's New ETF Review Process Sparks Conflicts of Opinion

The U.S. Securities and Exchange Commission (SEC) is gathering opinions on the review process for new exchange-traded funds (ETFs), leading to a divide between the crypto industry and traditional finance. Key issues include the speed of approval, non-public pre-consultations, automatic effectiveness procedures, and the classification of new ETFs. In a document requesting opinions on new ETFs dated June 30, the SEC sought public input on ETFs that include crypto assets, commodity-like instruments, and single-asset strategies. The deadline for submitting opinions is set for August 31. Grayscale proposed informal pre-consultations and a 45-day response procedure, arguing that improving review speed provides predictability for issuers and investors. Andreessen Horowitz demanded a shortened review process and suggested conducting reviews in parallel through electronic submissions and templated disclosures. In contrast, Charles Schwab opposed informal procedures, emphasizing the need for preparation time for investor education and risk disclosures. Jane Street warned that rushed registration processes could lead to low liquidity products. Discussions are also ongoing regarding whether the SEC will treat new ETFs as a single bundle. This debate is expected to lead to issues concerning the product structure and costs of U.S. crypto ETFs.

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