Grayscale is among the crypto firms asking the U.S. Securities and Exchange Commission to allow confidential draft registrations for proposed exchange-traded products before they are filed publicly, as the regulator weighs changes to its treatment of "novel" ETFs.
The crypto asset manager said an optional confidential process could reduce the incentive for competing sponsors to submit imitative or duplicative filings. It also wants SEC staff to commit to responding within 45 days. 21Shares made a similar request, pointing to the speed at which competitors can copy public filings. The SEC had asked whether artificial intelligence may be contributing to several novel ETF applications being submitted in rapid succession that are "largely identical."
A16z wants the SEC to shorten its review process too. It argued that filings are now submitted electronically, disclosures are largely templated, and many of the same questions come up across products. Markets also move on a shorter timeline than the existing review period, it said. However, a faster process should not mean "a lighter review," a16z added.
Jane Street and Schwab raise concerns
In contrast, Jane Street said pressure to get an ETF to market quickly can result in rushed registrations and leave less time for sponsors to get feedback from market makers on fund structure and liquidity. It also proposed requiring ETFs to launch with at least two authorized participants, the firms that facilitate the creation and redemption of ETF shares.
