Grayscale Challenges SEC on Crypto ETF Regulations Amid Ongoing Review
Grayscale has formally urged the U.S. Securities and Exchange Commission (SEC) to refrain from altering the current regulations governing crypto exchange-traded funds (ETFs). In a comment submitted on August 31, the asset manager argued that proposed new limits would not benefit investors and could lead to increased costs.
The SEC initiated a review of crypto ETFs on June 30, posing 27 questions regarding the regulatory framework for these funds. Among the key issues is whether the term “ETF” should be restricted to funds registered under the Investment Company Act of 1940. Grayscale contends that its spot crypto products, including the forthcoming Zcash ETF, are classified as commodity trusts and should not be subjected to such restrictions.
Craig Salm, Grayscale's Chief Legal Officer, emphasized that limiting the use of the term ETF could create confusion for investors rather than clarify the market. The firm also expressed opposition to potential revisions of Rule 6c-11, which currently allows ETFs to launch without individual approvals. Grayscale warned that imposing new portfolio limits or asset-class restrictions would ultimately increase fees for shareholders.
The ongoing review has already delayed the trading of Grayscale’s five-asset crypto fund, which was cleared for listing on June 30, 2025, but did not commence trading until September 19, resulting in an 81-day wait. Grayscale is now advocating for a confidential pre-filing process that would allow for a quicker response from SEC staff.
As the SEC continues to deliberate, the demand for crypto ETFs has cooled since the initial surge in launches. The regulatory landscape surrounding crypto assets is evolving, and the SEC's decisions will significantly impact the future of crypto funds in the United States.
Updated 00:01 UTC
New Insights on XRP and ETF Demand
- XRP could potentially reach $2.14 by late November, driven by sustained ETF demand.
- CryptoSlate's 90-day model predicts an 80th percentile bullish outcome, suggesting a price increase of nearly 59% from its $1.35 reference close.
- US XRP ETFs have seen net inflows for six consecutive months, totaling approximately $474 million.
- The current trading price of XRP is around $1.32 to $1.33, following a 23% to 24% gain over the past month.
- The model forecasts a price range of $1.81 to $2.81 for XRP, with a median outcome of $1.47, indicating a modest gain of about 8.9%.
- CME reported an average of 36,600 XRP futures contracts traded daily in Q2, with a total notional volume of $10.8 billion.
- Leveraged funds are net short on 115.7 million XRP, which could amplify price movements in either direction.
- Regulatory uncertainty has decreased following the SEC and Ripple's resolution of their long-standing civil case in August 2025.
FAQ
What is Grayscale's position on the SEC's proposed changes to crypto ETF regulations?
Grayscale has urged the SEC to maintain the current regulations governing crypto ETFs, arguing that proposed new limits would not benefit investors and could lead to increased costs.
What are the key issues being reviewed by the SEC regarding crypto ETFs?
The SEC is reviewing whether the term 'ETF' should be restricted to funds registered under the Investment Company Act of 1940 and has posed 27 questions about the regulatory framework for these funds.
How does Grayscale classify its spot crypto products?
Grayscale contends that its spot crypto products, including the upcoming Zcash ETF, are classified as commodity trusts and should not be subject to the same restrictions as traditional ETFs.
What concerns does Grayscale have about potential revisions to Rule 6c-11?
Grayscale opposes potential revisions to Rule 6c-11, which currently allows ETFs to launch without individual approvals, arguing that new portfolio limits or asset-class restrictions would increase fees for shareholders.
What impact has the SEC's review had on Grayscale's crypto fund trading?
The ongoing review has delayed the trading of Grayscale’s five-asset crypto fund, which was cleared for listing on June 30, 2025, but did not commence trading until September 19, resulting in an 81-day wait.
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