After proving cautious to allow crypto-based exchange-traded products (ETPs), the U.S. Securities and Exchange Commission (SEC) is now going to allow these products to be listed without first getting specific regulatory approval.
The regulator approved proposed rule changes by a trio of exchanges — Nasdaq Stock Market LLC, CboeBZX Exchange, Inc., and NYSE Arca, Inc. — to adopt generic listing standards for ETPs that hold spot commodities, including digital assets. As a result, the exchanges will be able list and trade products that meet the basic listing standards without first seeking SEC approval.
“By approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets. This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America’s trusted capital markets,” said SEC chairman, Paul Atkins, in a release.
However, SEC commissioner Caroline Crenshaw opposed the move, arguing that the SEC “is passing the buck on reviewing these proposals,” and sacrificing investor protection to fast track the listing of “new and arguably unproven products to market.”
She warned that the decision continues to erode the distinction between ETPs and ETFs, which is “legally incorrect and practically dangerous for investors,” as they are governed by different legal regimes with different investor protections.
Crenshaw also said that generic listing standards aren’t appropriate for digital asset ETPs, “due to the unique risks that still exist in the underlying crypto spot markets.”