Crypto Groups Urge SEC for Tailored Rules for New ETFs

Several groups in the cryptocurrency sector have petitioned the U.S. Securities and Exchange Commission (SEC), stating that current regulations are insufficient for next-generation exchange-traded funds (ETFs) and that product-specific rules are needed. The requests focus on compliance and operational issues that have emerged following the introduction of ETFs based on crypto assets. The groups filing the applications emphasize that existing ETF regulations were designed for traditional assets, while cryptocurrencies exhibit distinct characteristics. They argue that the SEC should either establish a separate regulatory framework for these new products or adapt current rules to crypto assets. Otherwise, uncertainties for both issuers and investors are expected to persist. According to the details of the requests, current rules are unclear regarding daily price calculations, custody processes, and market making for crypto ETFs. Notably, the 24/7 trading and high volatility of crypto assets introduce risks different from traditional ETFs. Therefore, the SEC is urged to set special rules that account for these differences. The SEC's stance on this matter has yet to be clarified. However, the growth of the cryptocurrency market and increasing institutional interest necessitate a more comprehensive approach by regulators toward these new products. Industry representatives express readiness for constructive dialogue with the SEC and a desire to contribute to a regulatory framework that prioritizes investor protection. This is not investment advice.