Crypto industry participants are urging the U.S. Securities and Exchange Commission (SEC) to reject blanket restrictions on novel ETF structures, arguing that a case-by-case review keyed to actual risk—rather than a product’s novelty—better serves both investor protection and market innovation.

The push centers on the SEC’s open comment file on overhauling how it evaluates non-traditional exchange-traded funds. The debate sits within comment file S7-2026-24, the SEC’s public comment docket tied to its rethink of the rules governing novel ETF products. The agency opened the comment period after signaling it would reconsider its framework for novel ETFs.

The stakes are familiar terrain for crypto issuers. Spot bitcoin ETFs reached U.S. markets in January 2024 only after the SEC granted case-by-case exemptive relief under the Investment Company Act of 1940, a precedent industry participants frequently cite as evidence that filing-specific review can accommodate novel assets within existing investor-protection frameworks.

Why the industry is pushing back on blanket ETF limits

The core dispute is over the standard, not any specific product. “Blanket novel ETF restrictions” would mean rules that automatically limit entire categories of new ETF structures based on how unfamiliar they are—before any individual filing is examined on its merits.

Issuers argue the SEC should focus on the specific risks in a given filing rather than treating novelty itself as a disqualifier, according to reporting on the comment submissions. Under that view, each proposal would be judged on its disclosures, structure, and investor-protection safeguards.

The industry’s position can be summarized as follows:

• The request: Do not apply broad, category-wide restrictions to novel ETF structures.
• The reasoning: Risk-based, filing-by-filing review lets regulators target genuine problems without foreclosing sound products.
• Why now: The SEC’s open comment file on overhauling ETF rules is the venue where the standard is being decided.

The distinction the industry is drawing is between targeted oversight of specific risks and broad restrictions applied to a whole class of products. One of the formal submissions is documented in the docket’s comment letter record.

What the SEC’s approach could mean for future crypto ETF filings

For fund issuers, the choice of standard is strategic. A blanket policy could make it harder to bring new crypto-related ETF structures to market, since a product could be limited by its category rather than assessed on its own design.

A case-by-case framework, by contrast, would leave the SEC free to reject weak filings while allowing stronger proposals to advance. That matters for investor access, since the chosen standard shapes whether investors can reach new forms of regulated crypto exposure through vetted vehicles.

The convergence of on-chain assets and traditional fund wrappers is also the pathway through which newer categories—including infrastructure tied to the expanding intersection of AI and crypto—would eventually seek regulated access. The review standard the SEC settles on will set the baseline of consistency and predictability against which those future filings are measured. Commenters have historically watched SEC comment dockets closely because positions staked in these files often shape how subsequent filings are reviewed.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.