Grayscale Fights With SEC Regarding Crypto ETF Future: “Don’t Ruin What’s Working”

Grayscale is pressing the SEC to preserve current crypto ETF rules, arguing that new restrictions would raise costs without benefit to investors. The regulatory review could determine whether commodity-based crypto funds retain their market access or face stricter oversight alongside traditional investment company ETFs.

• Grayscale filed comments on August 31 opposing SEC restrictions on crypto ETF naming and Rule 6c-11 approval processes.
• The SEC stayed approval of Grayscale’s five-asset crypto fund for 81 days between June 30 and September 19, 2025.
• The SEC opened its ETF rulebook review on June 30 with 27 questions spanning seven asset classes including crypto.

• 81 days Delay between SEC staff approval and NYSE Arca listing for Grayscale’s multi-asset crypto fund
• 27 questions SEC posed in its June 30 review of ETF rules across multiple asset categories

Grayscale has become the focal point in a broader regulatory debate over how the Securities and Exchange Commission should govern crypto exchange-traded funds. In comments filed on August 31, the final day of the public comment window, the asset manager urged the SEC to maintain existing rules rather than impose new constraints that it said would increase costs without delivering investor protections. The underlying dispute centers on whether crypto ETFs should be forced into a single regulatory framework or whether the current system, which has allowed commodity-based crypto trusts to operate successfully since 2013, should persist.

Grayscale argues against redefining ETF terminology

At the heart of Grayscale’s position is a question the SEC posed in its June 30 review: whether the term “ETF” should be restricted to funds registered under the Investment Company Act of 1940. Grayscale’s spot crypto products, including its pending Zcash ETF, are structured as commodity trusts rather than registered investment companies. The firm has operated under this structure since 2013 without incident.

Grayscale Chief Legal Officer Craig Salm argued that restricting ETF terminology would create confusion rather than clarity. “The term ETF accurately describes the economic reality of exchange-traded commodity trusts, and restricting its use to registered investment companies would create investor confusion rather than resolve it,” according to the comment letter. Changing the naming rules would force investors to navigate different product labels for economically equivalent offerings, Grayscale contended, adding complexity without substantive benefit.

The distinction matters because commodity trusts operate under different regulatory oversight than traditional investment company ETFs. Commodity-based trusts are regulated primarily by the Commodity Futures Trading Commission and SEC Division of Trading and Markets, while investment company ETFs fall under the Investment Company Act framework. This structural difference has enabled Grayscale and similar providers to bring crypto products to market with a clearer regulatory pathway, avoiding some of the scrutiny applied to securities-registered funds.

The 81-day approval delays driving rule changes

Grayscale’s most concrete grievance stems from its recent experience with regulatory delays. The SEC’s Division of Trading and Markets cleared a NYSE Arca listing rule for Grayscale’s five-asset crypto fund on June 30, 2025. The Commission then stayed that decision, preventing the fund from trading for 81 days until September 19, 2025. That delay underscores the friction Grayscale says stems from undefined rules.

The 81-day stay raised questions about the SEC’s internal coordination and decision-making processes. While the full Commission can stay staff approvals to allow time for review, extended delays create uncertainty for fund sponsors and their investors. Grayscale did not publicly comment on the specific reasoning behind the stay, but industry observers noted the timing coincided with the SEC’s broader ETF rulebook review.

The firm also objected to potential rewrites of Rule 6c-11, the 2019 regulation that allows ETF sponsors to launch new funds without seeking individual SEC approval for each offering. Grayscale warned that adding portfolio limits or asset-class bans would increase operational and compliance costs, which shareholders ultimately bear. To address legitimate concerns while preserving market efficiency, Grayscale proposed a confidential pre-filing process with a 45-day staff response window, though it did not specify whether that proposal gained traction in the comment period.

Broader SEC review spans multiple asset classes

The SEC’s examination of ETF rules is not limited to crypto. The regulator opened the review on June 30 with 27 questions directed at rules governing seven asset types including commodities, fixed income, and international securities. SEC Chairman Paul Atkins cited rapid growth as justification, noting that ETF assets have tripled since 2019. The scope reflects recognition that the regulatory framework, last substantially updated in 2019, may not adequately address market evolution.

Some fund sponsors have already halted new product launches while the regulatory review proceeds, creating a market-wide pause. This hesitation reflects the uncertainty inherent in regulatory reviews. Sponsors must weigh the cost of developing new products against the risk that rules may change, making their planned offerings obsolete or non-compliant before launch.

Crypto products face particular scrutiny within the review because they represent the newest and fastest-growing segment. Unlike commodities such as gold or oil, which have decades of exchange trading history, crypto assets are still establishing trading patterns and demonstrating custody and valuation reliability. The SEC’s caution reflects both its mandate to protect investors and broader questions about whether existing regulatory categories adequately accommodate digital assets.

The Investment Company Act of 1940, which anchors the regulatory framework, turns 86 this year. How the SEC resolves its ETF rulebook review will determine whether commodity-based crypto funds retain access to exchange listing or whether pending products like Grayscale’s Zcash ETF face a revised approval pathway and higher barriers to market entry. The outcome will likely influence how other asset classes structure new exchange-traded products for years to come.

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