Grayscale, a16z, and CCI have called on the SEC to stick with its current approach to classifying exchange-traded products, warning against slapping a single label on all new ETFs. They argue the regulator shouldn’t treat every new product as if it fits into one bucket. Instead, they’re pushing for multiple paths that would make it easier and faster to get clarity during the review process.

What Happened

Industry leaders have gone public asking the SEC not to tighten the rules across the board for new financial instruments, and to keep the existing classification system in place. At the same time, they’ve put forward ideas they say would make the review process more transparent and efficient for applicants.

What the Market Wants

Their main ask has two parts: first, don’t lump all new exchange-traded products into a single category with blanket restrictions; second, keep the current rules for classification, but add clear routes to faster, more transparent regulatory reviews.

Why It Matters

How the SEC classifies these products determines the hoops applicants must jump through: what requirements apply, how risk and disclosures are judged, and the timeline and criteria for review. A “substance over label” approach lets the SEC actually look at what a product is, rather than just what it’s called—reducing headaches and uncertainty for issuers and investors. That’s exactly what these proposed pathways aim to deliver: clearer, quicker reviews for everyone involved.