The largest digital asset manager, Grayscale, has submitted formal comments to the U.S. Securities and Exchange Commission (SEC) demanding the preservation of the current regulatory framework for cryptocurrency exchange-traded funds (ETFs). The company warns that introducing additional restrictions will only increase costs for investors without providing any real benefit.
My analysis shows that this is not just a bureaucratic formality, but a strategic battle for the future of the entire crypto-ETF industry. Grayscale filed its objections on August 31 — the last day for accepting proposals — as the SEC considers whether separate regulation for such products is necessary.
The Core of the Conflict: The Definition of an ETF Under Threat
The Commission initiated a review of the rules back on June 30, putting 27 questions up for discussion, with cryptocurrencies among the seven asset classes under consideration. SEC Chairman Paul Atkins rightly noted the scale of the problem: assets under management in ETFs have tripled since 2019. However, it is precisely this growth that concerns the regulator, which has already frozen the launch of a number of new products.
The central point of dispute is the SEC's attempt to limit the term "ETF" exclusively to funds registered under the Investment Company Act of 1940. Grayscale categorically rejects this approach. Since 2013, the company has structured its products, including the upcoming Zcash ETF, as commodity trusts rather than investment funds. According to Chief Legal Officer Craig Salm, restricting the term to investment companies only would create confusion in the market and mislead investors about the nature of these instruments.
The Precedent of an 81-Day Delay
Adding particular piquancy to the situation is Grayscale's own recent experience. The SEC approved the listing of a multi-asset crypto fund on NYSE Arca on June 30, 2025, but then froze its own decision without explanation. The fund only hit the exchange on September 19 — after an 81-day wait. Now the company insists on introducing a clear closed period during which the SEC must respond within 45 days.
Grayscale emphasizes that any limits on portfolio compositions or restrictions on asset classes will inevitably lead to higher fees, which will fall on the shoulders of shareholders. This is especially critical in an environment where competition for capital in the ETF segment is becoming increasingly fierce.
The 1940 Act has remained the cornerstone of regulation for more than eight decades, and the SEC's decisions on it will set the development trajectory for all crypto funds awaiting approval. The outcome of this dispute will determine whether the U.S. market can maintain its leadership in the institutional adoption of digital assets or cede the initiative to more flexible jurisdictions.
My expert assessment: Grayscale takes a rational position, but the market needs a compromise. The SEC should not artificially restrict innovation, yet transparency and protection of retail investors remain a priority. The regulator's decision will become a crucial signal for the entire industry in the coming years.