The SEC has voted to adopt amendments that will expedite review procedures for entities looking to register under the Investment Company Act.
According to an announcement on July 6, the U.S financial watchdog intends to increase certainty and transparency with this move. Notably, firms that operate crypto Exchange Traded Funds (ETF's) might have found some reprieve following the SEC's vote. SEC Chair, Jay Clayton said,
“The changes approved today will modernize and streamline this process, resulting in improved transparency, reduced costs, and more efficient use of our staff’s resources.”
With this development, companies seeking to apply for exemptions and other relief funds stipulated by the Investments Act can do so more efficiently. This is because the commission adopted amendments to Rule 0-5 under the Investments Act hence making it possible to expedite the underlying procedures for seeking exemption orders. Therefore, the SEC notes that stakeholders will enjoy more economic benefits,
“Granting appropriate exemptions from the Act can provide important economic benefits to funds and their shareholders, foster financial innovation, and increase the diversity of opportunities for investors.”
Changes made to expedite the review procedure include consideration for entities whose proposal is similar to two other projects approved by the SEC within three years. In addition to this, notice filings for applications seeking expedited review will be published in less than 45 days unless they do not meet the requirements to initiate the process. Consequently, applicants need to respond to SEC comments within a month or risk their requests being thrown out.
Impact on Crypto Based ETF's
The SEC has been quite reluctant in allowing crypto-pegged ETF's to roll out in the U.S financial market. However, this might soon change within the next nine months as per the SEC's scheduled implementation date for the changes to Rule 0-5. Looking back, Bitcoin ETF's such as the Wilshere Phoenix have been rejected by the commission citing security issues and possible market manipulation.
The latest one to launch is the WisdomTree Fund ETF, whose exposure to BTC futures is 5%. Could it be among the pioneer beneficiaries of the new amendments? Only time will tell whether the new SEC approach to funds under the Investments Company Act will also favor crypto stakeholders eyeing the U.S market liquidity. Nonetheless, the move will probably present an avenue for regulated crypto-oriented ETF's to seek exemption orders as well.