Grayscale Urges SEC to Keep Existing Crypto ETF Rules

Grayscale submitted a comment to the U.S. Securities and Exchange Commission (SEC) on August 31, the final day of the public comment period, urging the agency to maintain the current regulatory framework for crypto exchange‑traded funds (ETFs).

Background of the SEC Review

The SEC began a review of novel ETF structures on June 30, posing 27 questions that cover seven asset classes, including crypto. The agency is considering whether the term “ETF” should be limited to funds registered under the Investment Company Act of 1940.

Grayscale’s Position

Grayscale argues that its spot crypto products, such as the pending Zcash ETF, are structured as commodity trusts—a model the firm has used since 2013. The firm’s chief legal officer, Craig Salm, stated that restricting the ETF label to registered investment companies would create confusion for investors.

Potential Impact of Rule Changes

Grayscale opposes revisions to Rule 6c‑11, a 2019 provision that allows ETFs to launch without case‑by‑case approval. The firm warns that adding portfolio limits or asset‑class bans could increase fees for shareholders. Grayscale cites a recent experience where a NYSE Arca listing rule cleared for its five‑asset crypto fund was stayed by the SEC, resulting in an 81‑day delay before the fund began trading.

Requested Process Improvements

The asset manager also seeks a confidential pre‑filing process with a 45‑day staff response window, though the comment period has now closed.

Broader Market Context

Demand for crypto ETFs has cooled since the earlier launch boom, and the outcome of the SEC’s deliberations will affect all crypto funds awaiting approval.