SEC Advances Crypto ETF Registration with New Guidance
The U.S. Securities and Exchange Commission (SEC) is making strides toward a more organized system for crypto exchange-traded products (ETPs). On July 1, the SEC’s Division of Corporation Finance issued fresh guidance to clarify the registration process for crypto ETFs.
This guidance doesn’t introduce new rules but sets clearer expectations. It focuses on areas like net asset value calculation, custody practices, benchmark selection, service provider arrangements, and risk disclosures. Issuers must now provide detailed information on how they store crypto assets. This includes whether private keys are in hot or cold wallets, who has access, and the insurance protections in place.
The SEC aims to bring openness to service providers and potential conflicts of interest. For example, it wants to know if the sponsor or its affiliates hold the underlying tokens.The update is based on recent spot crypto ETF filings, aiming to reduce delays and create a consistent submission process.
Issuers must explain how they store assets and the insurance protections in place. The SEC seeks greater transparency around service providers and conflicts of interest.
According to journalist Eleanor Terrett’s X post, the SEC is exploring a formal listing standard for crypto ETFs. This could simplify the application process for qualifying ETFs, allowing them to skip the current 19b-4 rule change process.
While details are still vague, the framework may consider factors like market cap, trading volume, and liquidity. If pursued,issuers would file a standard S-1 and wait 75 days before listing,significantly reducing delays.
