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Grayscale wants the SEC to back off. The asset manager filed a formal comment letter on August 31 — the last day of the public comment window — urging regulators not to rewrite the rules that govern crypto exchange-traded funds. The company’s core argument: new restrictions would cost investors money without giving them anything back.
The SEC kicked off this review on June 30, publishing 27 questions aimed at understanding how different asset classes, including crypto, fit inside the existing ETF framework. It’s a broad inquiry, and the answers could reshape how crypto funds get launched, labeled, and sold in the U.S. for years. The comment window has now closed. What happens next is up to the Commission.
The Fight Over What “ETF” Actually Means
One of the SEC’s 27 questions zeroed in on something that sounds technical but carries real weight: should the word “ETF” be reserved only for funds registered under the Investment Company Act of 1940? Grayscale says no — and it’s pretty clear about why.
Craig Salm, Grayscale’s Chief Legal Officer, said in the comment letter that restricting the “ETF” label to registered investment companies would create investor confusion, not reduce it. That’s the opposite of what the SEC is supposed to do. Grayscale’s spot crypto products — including the still-pending Zcash ETF — are structured as commodity trusts, not traditional ETFs under the 1940 Act. The company has been running these products since 2013. Relabeling or reclassifying them now, Salm’s letter argues, would muddy the water for everyday investors who’ve grown used to how these products are described and marketed.
The 1940 Act turns 86 this year. It was written for a very different financial world. Applying its definitions rigidly to spot crypto commodity trusts probably wasn’t what its drafters had in mind — though the SEC will decide how much that history matters.
Rule 6c-11 and the 81-Day Wait That Grayscale Won’t Let Go
Beyond the naming fight, Grayscale is pushing hard against any changes to Rule 6c-11. That rule, put in place in 2019, lets ETFs launch without needing individual SEC approvals for each product. It’s basically the reason the ETF market can move as fast as it does. Grayscale warns that if the SEC layers on portfolio limits or bans on certain asset classes under that rule, fund costs go up. And those costs don’t stay with the fund manager — they land on shareholders.
The company isn’t just making abstract arguments here. It’s pointing to something that actually happened. SEC staff approved a NYSE Arca listing rule for Grayscale’s five-asset crypto fund on June 30, 2025. But the full Commission delayed the decision. The fund couldn’t trade for 81 days — not until September 19. Grayscale isn’t letting that slide. It’s using the delay as a concrete example of why the current approval process is broken and why the fix needs to be structural, not cosmetic.
So what does Grayscale want instead? A confidential pre-filing process, with SEC staff required to respond within 45 days. That’s the proposal on the table. Whether the Commission finds it workable is unclear.
What’s at Stake for Crypto Fund Managers
The broader crypto fund industry is watching this closely. Some sponsors have already paused new launches while waiting to see what the SEC does. That’s not a small thing — it means products that might otherwise be in market are sitting on the sidelines, and investors who’d want access to them can’t get it.
Grayscale’s Zcash ETF is one of those products still waiting. It’s structured as a commodity trust, same as the firm’s other spot crypto offerings. And it sits in a kind of regulatory limbo while the SEC figures out whether the current framework needs an overhaul or just a tune-up. No details on timing have been given publicly.
The economic stakes are real. Any new portfolio limits would push up operational costs. Grayscale’s position is that those costs flow directly to investors — the exact people the SEC is supposed to protect. It’s a pointed argument, and it’s probably the one the Commission will have the hardest time dismissing outright.
ETF assets have grown sharply since Rule 6c-11 took effect in 2019. The crypto ETF segment, after its initial surge, has seen demand cool somewhat since the early boom. But the regulatory decisions coming out of this review won’t just affect today’s lineup. They’ll set the terms for what gets built next — and how long it takes to get there.
Grayscale’s five-asset crypto fund sat frozen for 81 days before it could trade on NYSE Arca.
Frequently Asked Questions
What is Grayscale asking the SEC to do about crypto ETF rules?
Grayscale filed a comment letter on August 31 urging the SEC not to change the existing rules governing crypto ETFs, arguing that new restrictions like portfolio limits or asset-class bans would raise costs for shareholders without adding benefits.
What is the pending Zcash ETF and how is it structured?
Grayscale’s Zcash ETF is a spot crypto product structured as a commodity trust, not a traditional ETF registered under the Investment Company Act of 1940, and it remains pending as the SEC reviews its broader crypto ETF framework.
Why It Matters
Grayscale's push against the SEC highlights the ongoing tension between regulatory bodies and crypto asset managers, a dynamic that could significantly influence the future of cryptocurrency ETFs. By advocating against potential rule changes, Grayscale seeks to protect investor interests while navigating an increasingly complex regulatory landscape that could shape the market's accessibility and structure. The outcome of this dispute may set important precedents for how cryptocurrencies are integrated into traditional financial systems, impacting both investor confidence and market stability.
