(Bloomberg) -- A new sheriff is coming to town and the exchange-traded fund industry can’t wait.

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David Grim, the top official in charge of approving newfinancial products at the Securities and Exchange Commission, isstepping down next month, the agency said Thursday.

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The move is spurring speculation that innovative funds may findit easier to gain approval, and those that have struggled could geta second look under a different regime.

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Critics worry that retail investors could be at risk from morecreative strategies, so the SEC has taken a relatively conservativeapproach to approving ETFs, even as the products explode inpopularity and variety.

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The regulator rejected a bitcoin ETF proposed by Tyler and Cameron Winklevoss inMarch, causing the virtual currency’s value to plummet 18percent.

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And it has dragged its feet on an active structure championed byPrecidian Investments, among others, that would keep assetshidden.

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All that could now change.

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“If the new director is more of an activist you could see abigger push toward getting new things done,” said KathleenMoriarty, a partner at Arnold & Porter Kaye Scholer LLP whohelped start the first U.S. ETF.

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New Chief

Grim joined the SEC division of investment management 22 yearsago and has worked there since, most recently as its director,the agency said in its release.

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The division oversees the $70 trillion asset managementindustry, including ETFs, mutual funds and closed-end funds.

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Dalia Blass, a former member of the division who departed in2016 for law firm Ropes & Gray LLP, is said to be in line totake over, according to a person familiar with the matter. Blass,whose firm advised the Winklevoss twins on their most recent bidfor SEC approval, is an ETF specialist.

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Blass, who if she took the job would likely have to recuseherself from specific matters she worked on as a private lawyer,didn’t respond to a request for comment on whether she’ll take overthe role. The SEC declined to comment.

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Since Grim joined the SEC, ETFs have exploded into a $3 trillionindustry of more than 2,000 products used by everyone frommom-and-pop investors to the world’s largest institutionalmanagers. That’s proved a challenge for the agency, which overseesETFs under asset management rules adopted in 1940.

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“What the division really needs is leadership,” StacyFuller, a partner at K&L Gates LLP, said at an industryconference in June. “It’s not so much education, but someone needsto be willing to take the risk that they’re going to end up on thefront page.”

Rules rollback

Grim’s departure is part of a wholesale change at the SEC as JayClayton, the agency’s new head, contemplates a review of manyregulations put in place after the financial crisis.

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Since taking over as chairman in May, Clayton has picked WilliamHinman, who recently retired as a partner at Simpson Thacher &Bartlett LLP, to lead the corporation finance unit. He’s alsotapped Steven Peikin, a former colleague of his from Sullivan &Cromwell LLP, and Stephanie Avakian as co-directorsof the agency’s enforcement division.

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The upheaval could stall any immediate rush to approve new ETFproposals, according to Spencer Mindlin, an analyst at AiteGroup.

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“In terms of appetite for new untested, unvetted stuff, thatmight slow things down,” he said. “You have two competing forceshere: the political administration’s promise of regulatory reliefand a complete change of guard at the SEC.”

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Clayton himself has yet to weigh in specifically on theprospects for easing the framework for ETFs. The agency’sregulatory agenda did, however, mention a rule that was proposedalmost a decade ago and would “facilitate greater competition andinnovation among ETFs,” according to a description of the plan from2008.

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Norm Champ, a partner at Kirkland & Ellis LLP who ran thedivision from 2012 to 2015, with Grim as his deputy for a chunk oftime, said the outgoing director did a “great job” running theunit. But he added that it’s not surprising he’d step down aftermore than two decades at the agency and with new leadership comingin.

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“You’re going to see more of an emphasis on products that helpcapital formation,” Champ said. “You’ll see a lot more of anattempt to try to increase investor choice.”

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