SEC Investment Management Chief Says Agency Misstepped on Crypto, Vows Orderly ETF Review Process

The US Securities and Exchange Commission acknowledged it lost the industry's trust in its earlier handling of crypto regulation and said it plans to improve its review framework for exchange-traded funds.

Brian Daly, director of the SEC's Division of Investment Management, said on Bloomberg's Trillions podcast on July 2 that the agency "got it wrong in the crypto space" and lost credibility. It now wants to rebuild that trust and create an orderly review process, he said.

Daly said the SEC is receiving about 200 ETF listing applications each month, and new types of products such as prediction-market ETFs are growing quickly. The agency is not trying to block innovative products. Instead, it is working to build an orderly process to review them.

Eric Balchunas, Bloomberg's senior ETF analyst, said the interview showed the SEC is trying to maintain its core investor-protection role while taking a more innovation-friendly stance. Rather than using regulation to block new products, as it did under former Chair Gary Gensler, the agency is focused on establishing a clear review process.

Balchunas added that the SEC is facing a heavy workload from the steady stream of monthly ETF filings. He said the regulator will focus on building a predictable and consistent review framework for a range of new products, including crypto ETFs.