Woofun AI reports that Brian Daily, Director of the SEC's Division of Investment Management, has publicly acknowledged that the agency's mishandling of cryptocurrency regulation eroded trust within the industry. This admission marks a strategic pivot as the regulator commits to restoring confidence by processing the roughly 200 ETF applications received each month through a more orderly and transparent system.

Bloomberg ETF analyst Eric Balchunas confirmed that Daily explicitly stated the SEC did not handle digital assets well, creating a breakdown in trust between the regulator and market participants. Such self-criticism from a senior SEC official is rare and signals a broader shift in the agency's approach toward the crypto sector.

The SEC currently manages approximately 200 ETF applications monthly, a volume Daily described as challenging yet manageable under a new structured review system. He emphasized the need for a predictable framework to normalize the approval process and ensure consistent handling of these filings.

Notably, Daily warned that approving prediction market ETFs could trigger a surge of 500 to 1,000 additional applications in a short period. This potential influx requires careful planning to prevent bottlenecks that could stall the entire review pipeline.

Woofun AI data shows that to protect intellectual property and legitimate business interests, Daily proposed a non-public application system allowing firms to submit sensitive information without public disclosure. This mechanism aims to balance consumer protection and market integrity while accelerating regulated exposure to crypto-related ETFs for asset managers, exchanges, and institutional participants. The approach also addresses ongoing debates regarding on-chain products, decentralized finance, and investor safeguards.

While challenges remain regarding the classification of digital assets and the regulatory framework for DeFi, Daily's pledge signals a potential turning point in the SEC's relationship with the crypto industry. Investors and market participants should monitor how the agency navigates high application volumes to establish a truly predictable and transparent regulatory environment.