SEC’s Crypto ETF Paradox: Why Approval Doesn’t Mean Go-Time in 2025

The SEC keeps playing gatekeeper—even after unlocking the doors. Here’s why crypto ETFs face bureaucratic purgatory.

The Approval Mirage

Greenlights aren’t green flags. The SEC’s rubber stamp on crypto ETFs came with invisible fine print: ‘Hurry up and wait.’

Regulatory Whiplash

One hand approves innovation while the other throttles deployment. Classic government efficiency—like printing ‘fast-track’ on a 3-year permit.

Wall Street’s Hidden Game

Meanwhile, institutional players quietly accumulate positions. Because nothing screams ‘fair markets’ like letting insiders front-run retail. *Cue finance-sector eye roll*

The takeaway? In crypto, even ‘yes’ means ‘not yet.’

SEC’s pattern of post-approval delays

The SEC’s latest MOVE echoes a similar pattern observed earlier this month.

On that occasion, the agency approved Grayscale’s request to convert its Digital Large Cap Fund (GDLC) into an ETF, only to issue a stay the following day. The GDLC also holds significant digital assets like Bitcoin and Ethereum.

Grayscale responded by challenging the stay, arguing that the approval was automatic due to the expiration of the SEC’s statutory review period. The firm claimed the Commission lacked the authority to reverse a decision effectively passed into law.

Bloomberg ETF analyst James Seyffart suggested the SEC might be intentionally delaying these approvals to finalize a broader regulatory framework.

According to him:

“[This] might be the SEC’s way of stalling these things from becoming ETFs before they come up with a digital assets ETF framework. AKA some sort of generic listing standard for what digital assets are allowed in an ETF wrapper and what criteria they’ll use.”

According to reports, the framework would allow issuers to no longer need to file individual rule-change requests if their tokens meet certain criteria. Instead, sponsors would register with FORM S-1, undergo a 75-day review, and list the product upon clearance.

Meanwhile, finance attorney Scott Johnsson offered a different interpretation of the repeated delays.

According to him, the financial regulator could be deliberately using the delegated authority to delay final approvals, potentially to avoid penalizing applicants like Grayscale or to circumvent the 240-day statutory review period.

Nevertheless, the lawyer noted that these issues should not occur under SEC Paul Atkins’s pro-crypto regime.

Considering this, Johnsson believes the uncertainty could be resolved before the October deadline, when several high-profile ETF applications are expected to face final decisions.