The ongoing regulatory debate in the United States around cryptocurrency ETFs is reaching a new level. Grayscale, one of the largest players in the digital asset market, has submitted formal comments to the U.S. Securities and Exchange Commission (SEC) urging it to abandon changes to existing rules. In my assessment, this is not merely a defense of its own interests, but a signal of systemic risks for the entire industry.
The Core of the Conflict: Terminology and Consequences
The Commission initiated a sweeping regulatory review on June 30, putting 27 questions up for discussion. The cryptoasset class was also in focus. The key point is an attempt to limit the definition of an "ETF" exclusively to funds registered under the Investment Company Act of 1940. Grayscale categorically disagrees with this approach.
The company rightly points out that its products, including the Zcash ETF preparing for launch, are structured as commodity trusts rather than classic investment funds. This model has been in use since 2013 and has proven its effectiveness. Grayscale's Chief Legal Officer, Craig Salm, emphasizes that restricting the term to only one category of legal entities would create confusion and mislead investors.
Delays and Costs
Particular attention is drawn to Grayscale's position against revising Rule 6c-11, adopted in 2019, which allows ETFs to be launched without individual approval for each application. Introducing new restrictions on asset classes or portfolio composition would inevitably lead to higher fees, which would fall on the shoulders of fund shareholders.
The company backs its argument with a clear example. The SEC approved the listing of Grayscale's multi-asset crypto fund on NYSE Arca on June 30, 2025, but then froze its own decision. As a result, the fund only hit the exchange on September 19—after an 81-day wait. Now Grayscale proposes introducing a closed pre-filing stage with a mandatory regulator response within 45 days, which, in my view, would be a reasonable compromise to enhance market predictability.
The situation appears to be a deadlock: the 1940 Act has been in effect for more than eight decades, and every SEC decision under it sets the direction for all crypto funds awaiting approval. The issue is not only about terms but also about the speed of bringing products to market and the ultimate cost to investors. I believe the regulator should heed Grayscale's arguments—otherwise, we risk ending up with an overly regulated market where innovation is sacrificed to bureaucratic caution.