Currently Crypto Exchanges have to file a
19b-4 Form, and wait for a review period of 240 days.
What is 19b-4 form?
19b-4 form is a document that Self-Regulatory Organization (SRO) in the United States, must file with the Securities and Exchange Commission #SEC . Concerning the Crypto Exchange Traded Product (ETPs) or #ETFs , they become relevant to Crypto space.
The Purpose
The purpose of the 19b-4 is to propose the rules changes by an SRO, which are necessary for the listing and trading of new financial products. For a spot Crypto ETF to be listed on a US regulated exchange, the exchange itself must file the form with the SEC. The SEC reviews the proposed rule change to ensure it aligns with the Securities Exchange Act of 1934. If approved by the SEC, it signifies that the exchange is allowed to list and trade the new crypto ETP or ETF.
While a 19b-4 approval is a major hurdle, it's usually followed by the need for the ETF issuer to have their S-1 registration statement declared effective by the SEC. The S-1 provides detailed information about the ETF's structure, operations, and disclosures.
The improvement
The SEC is working on a new framework that could significantly reduce the time and complexity involved in getting crypto ETPs approved.
The Agency might introduce :
- A generic listing framework that would allow eligible token-based ETFs to bypass the traditional 19b-4 rule-change process.
- ETF issuers would file a simplified S-1 registration, observe a fixed review period and proceed directly to listing.
- The SEC would likely establish specific criteria that a token must meet to qualify for this fast-track process.
- Increase Market Access for investors.
The new framework with streamlined process could lead to a faster introduction of diverse crypto-backed financial products. It will also reduce the regulatory burden and compliance costs for ETF Issuers.
This initiative could serve as a catalyst for both regulatory clarity and broader adoption, pushing crypto deeper into the financial mainstream.
