Crypto Firms Push SEC to Reform ETF Review and Allow Confidential Filings
A broad coalition of crypto asset managers, venture capital firms, and market infrastructure providers has asked the SEC to overhaul how it processes exchange-traded product applications, calling for confidential draft filings, tighter staff response windows, and clearer rules on staking receipt tokens inside spot crypto ETPs. The comment letters, submitted in response to an SEC request for public input and posted through early September 2026, set out competing visions for how the regulator should balance speed with rigour. For accounting firms, CFOs, and auditors with digital asset exposure, the practical stakes are real: the products that eventually clear this process will determine what needs to be classified, valued, and disclosed on balance sheets across the industry.
What the Industry Is Actually Asking For
The headline request from several firms is a confidential draft registration track, similar to the SEC's existing "test-the-waters" facility for certain IPOs. Under the current framework, every ETP application goes public as soon as it is filed, giving competitors an immediate view of the structure, index methodology, and fee arrangements a sponsor intends to use.
Confidential filings and the copycat problem
Grayscale argued in its submission that an optional confidential process would reduce the incentive for rival sponsors to submit near-identical applications the moment a novel fund concept becomes visible. It also asked SEC staff to commit to a 45-day turnaround on comments. 21Shares made a similar case, pointing specifically to the pace at which public filings can be replicated once they are visible in the system.
The SEC itself raised the copycat issue in its original request, asking whether artificial intelligence tools may be accelerating the submission of "largely identical" applications for novel ETF structures in rapid succession. That framing matters: it suggests the regulator sees the volume problem as a genuine operational challenge, not just an industry talking point.
Faster timelines, but not lighter reviews
a16z asked the SEC to shorten its overall review period. Its letter noted that filings are now submitted electronically, disclosures are largely templated across products, and many of the same questions recur. Markets, it added, move on a shorter timeline than the existing review cycle was designed to accommodate. Critically, a16z was explicit that faster should not translate into shallower: it argued for process efficiency, not a reduced substantive bar.
Where Industry Opinion Divides
Not every firm lined up behind the confidential filing proposal, and the divergence is instructive for anyone trying to read where SEC staff may land.
Jane Street's concern about rushed launches
Jane Street argued that pressure to reach the market quickly can result in rushed registrations, leaving fund sponsors with less time to seek feedback on structure and liquidity arrangements. It proposed requiring every ETF to launch with at least two authorised participants, the intermediaries that create and redeem fund shares, as a baseline safeguard against thin markets at launch. That proposal has direct implications for the liquidity risk disclosures auditors assess when signing off on fund financial statements.
Schwab's position on transparency
Schwab opposed a fully confidential filing process. If the SEC does engage with a sponsor privately, Schwab argued the filing should become public no later than 75 days before the fund takes effect. That 75-day window is designed to give market participants, including competing sponsors, authorised participants, and compliance teams at broker-dealers, adequate time to prepare. The disagreement between Grayscale and Schwab on this point is the sharpest in the comment record and the one most likely to force the SEC to draw a line.
Exchange timelines
At least one exchange used the comment process to raise a different concern: predictability. Under current practice, SEC staff can ask an exchange to delay a listing while a question is being considered, without providing a firm deadline, even if another exchange is not subject to the same hold. That asymmetry creates compliance and operational uncertainty for listing venues and, downstream, for the custodians and prime brokers that need to prepare for a product's arrival.
Staking Receipt Tokens: The Structural Question Inside the Filing Debate
Separate from the process arguments, several firms used the comment window to raise a substantive product design question: whether staking receipt tokens should be eligible to sit inside spot crypto ETPs.
What staking receipt tokens are
A staking receipt token represents a claim on an underlying crypto asset that has been committed to a proof-of-stake network. The token reflects both the original asset and any accruing rewards. Its value is therefore not fixed relative to the underlying; it grows as staking yield accumulates, which creates a more complex valuation and income recognition question than a simple spot holding.
Who is pushing for inclusion
Multicoin Capital, the Jito Foundation, and the Solana Policy Institute filed a joint response asking the SEC to establish clear rules allowing spot crypto ETPs to hold staking receipt tokens. A separate submission argued that qualifying staking receipt tokens should be permitted to make up substantially all of a fund's digital asset holdings, not just a token allocation. The practical effect, if granted, would be ETPs that deliver staking yield to investors through a familiar wrapper, a structurally different product from the spot Bitcoin or Ether funds already in the market.
Accounting and Audit Implications for Firms
The SEC has not set a timeline for any further action, and the comment record is still being processed. But the direction of travel has concrete consequences for teams responsible for digital asset accounting and reporting.
New product types need new accounting treatment
If the SEC eventually permits spot ETPs holding staking receipt tokens, accounting teams will need to determine how to classify those instruments. Under ASC 350-60, the FASB's fair value framework for fungible crypto assets, the fund itself marks holdings to fair value with unrealised gains and losses flowing through the income statement. A staking receipt token that accrues yield over time introduces a question about whether the yield component should be recognised separately and how the token's fair value is reliably determined when it does not trade with the same depth as the underlying asset.
Auditors signing off on ETP financial statements will need to assess whether the fair value hierarchy applied to staking receipt tokens is appropriate, whether Level 1 pricing is available, and how the fund documents its valuation methodology. That work requires crypto bookkeeping software capable of tracking not just spot prices but the accruing yield component of each token held. Firms that have not yet reviewed their FASB's proposed stablecoin cash-equivalent clarification alongside their broader digital asset accounting setup should treat that as a related parallel track.
Fund structure disclosures and the authorised participant requirement
If Jane Street's two-authorised-participant proposal is adopted, auditors reviewing ETP prospectuses and annual reports will need to confirm that the disclosure of liquidity risk adequately reflects the fund's reliance on those participants. A fund that launched with a single authorised participant and later added a second would need to assess whether prior-period disclosures remain accurate.
CFOs at firms that hold spot crypto ETPs on their own balance sheets also need to stay alert to how fund structure changes affect the fair value inputs they rely on. Thinner authorised participant markets at launch can create temporary pricing dislocations that ripple into Level 2 and Level 3 fair value assessments.
The confidential filing question and advance planning
For accounting firms advising asset manager clients, a confidential filing track would change the information environment. Today, a competitor's public filing is one source of market intelligence about what products are in the pipeline, which informs client advice on fund selection and portfolio accounting. A confidential track would reduce that visibility window. Advisers may need to rely more heavily on direct client communication and regulatory monitoring rather than public filing databases to anticipate new product types arriving on client balance sheets.
Digital asset accounting software that can ingest new instrument types quickly, without requiring manual configuration for each novel product, becomes more valuable in a market where novel ETPs can appear with less advance public notice. That is a procurement and systems consideration for accounting firms building or refreshing their technology stack.
What to Watch Next
The SEC's comment record on ETF review processes remains open for late submissions as of early September 2026. The regulator has given no indication of a rulemaking or formal guidance timeline. Key signposts to monitor include any SEC staff statement on the confidential filing question, a formal proposal on authorised participant minimums, and any guidance specifically addressing staking receipt token eligibility for spot ETPs.
The staking question in particular connects to a broader US market structure debate. Coinbase's SEC filing to list 24/7 equity perpetuals is one data point in the same broader effort by the crypto industry to expand what the SEC will permit on registered exchanges. The ETP comment record is another, and the two processes are likely to inform each other as SEC staff develop their positions across product types.
Accounting teams that wait for final SEC rules before updating their classification frameworks, valuation policies, and crypto bookkeeping software workflows risk being underprepared when new products hit client balance sheets. The better approach is to begin the analysis now, using the comment record as a structured preview of what the product landscape may look like within the next 12 to 24 months.
Frequently Asked Questions
What is the SEC currently reviewing regarding crypto ETPs?
The SEC solicited public comment on how it handles applications for novel exchange-traded products, including questions about review timelines, filing confidentiality, and the role of AI in generating near-identical submissions. The comment period closed on 31 August 2026, though the SEC has continued posting late submissions.
Why do firms want a confidential filing option?
A confidential draft registration track would allow a sponsor to engage with SEC staff on a novel fund structure before a public filing alerts competitors. Grayscale and 21Shares both argued this would reduce the incentive for rivals to submit copycat applications the moment an innovative concept becomes visible in the public record.
What are staking receipt tokens and why do they matter for ETPs?
A staking receipt token represents a crypto asset that has been locked in a proof-of-stake protocol, with the token accruing staking rewards over time. Several firms asked the SEC to allow these tokens inside spot crypto ETPs, potentially as the majority of holdings. If permitted, the structure would deliver staking yield to ETP investors but would also introduce more complex valuation and income recognition requirements than a straightforward spot holding.
How does this affect the accounting treatment of crypto ETPs?
Under ASC 350-60, crypto assets held by a fund are measured at fair value each period, with changes recognised in net income. If staking receipt tokens are included, the fund and its auditors need to determine whether a reliable fair value can be established, where in the fair value hierarchy the token sits, and whether accruing yield is a separate income stream or part of the token's overall fair value movement. Crypto accounting software capable of tracking these nuances will be necessary.
When will the SEC make a final decision?
The SEC has not announced a timeline for any formal rulemaking or guidance following the comment period. The agency is still accepting and posting submissions. Accounting and compliance teams should treat the comment record as early-stage intelligence and build scenario plans rather than waiting for a definitive outcome.
Source: The Block