Grayscale Pushes Altcoin ETFs Amid SEC's Regulatory Hold

Grayscale has submitted a series of Securities and Exchange Commission (SEC) filings on September 9, 2025, for exchange-traded funds (ETFs) targeting Bitcoin Cash (BCH), Hedera (HBAR), and Litecoin (LTC). The filings include S-1 and S-3 forms, with the aim of converting existing closed-end trusts into ETFs that would trade on platforms such as NYSE Arca or Nasdaq. This mirrors the process Grayscale employed in 2024 to transition its Bitcoin and Ethereum trusts into ETFs. The firm is operating under the assumption that the SEC has either approved the necessary listing standards or will allow generic listing rules that would facilitate the ETFs’ listing.

Grayscale’s move comes amid a broader push by several asset managers to expand the range of digital asset investment vehicles available to investors. Other firms, including Fidelity and VanEck, have also submitted applications for crypto ETFs, signaling a growing appetite for regulated exposure to alternative cryptocurrencies. The SEC, however, has yet to make a decision on several pending applications, including Grayscale’s Hedera ETF and Bitwise’s Dogecoin ETF. SEC Chair Paul Atkins has delayed action on these proposals, prolonging the regulatory uncertainty that has characterized the approval process for crypto products.

The filings also reflect Grayscale’s strategy to diversify its portfolio of crypto-linked investment products. The firm recently filed to convert its Grayscale Chainlink Trust into an ETF, indicating an aggressive pace of conversions despite the regulatory hurdles. The proposed Litecoin and Bitcoin Cash ETFs will become operational only if the SEC approves the Generic Listing Standards, a key regulatory step required for such funds to list on exchanges. Meanwhile, Grayscale filed an S-1 registration for its Hedera ETF, with the 19b-4 application already submitted, though the SEC has yet to issue a decision on this product.

At the time of the filings, Grayscale’s Bitcoin Cash Trust had a net asset value of over $202 million, with a share price of $4.31 as of June 30. Unlike Bitcoin and Ethereum ETFs, which have already seen significant investor demand, the potential altcoin ETFs face an additional challenge in attracting capital due to their relatively smaller market sizes and lower investor familiarity. A closed-end trust, such as Grayscale’s existing offerings, often trades at a premium or discount to its net asset value, while an ETF typically maintains a price closer to its net asset value due to its open-ended structure.

The broader approval of these ETFs could help mainstream investors access alternative cryptocurrencies through regulated markets, potentially improving transparency and custody practices. Industry observers suggest that such products could also serve to reduce volatility and increase institutional participation in the crypto market. However, until the SEC provides clarity on its approval timeline, the market remains in a state of anticipation, with investors and issuers alike closely monitoring regulatory developments.