SEC Balances Act: Grayscale Ethereum ETFs Receive Approval Amid Careful Oversight

Grayscale

ETFs Receive Approval Under Standard SEC Guidelines, Oversight Continues

Grayscale Investments revealed that its Ethereum-based exchange-traded products (ETPs) have secured approval from the U.S. Securities and Exchange Commission (SEC) under general regulatory standards. This update, shared in September 2025, highlights the SEC’s shifting approach to digital asset investments, while the regulator maintains active supervision to ensure adherence to financial rules. This decision is in line with broader efforts in 2025 to clarify regulations, which have helped Ethereum outperform many other cryptocurrencies.

The Grayscale Ethereum Covered Call ETF (ETCO) and the Grayscale CoinDesk Crypto 5 ETF (GDLC)—which counts Ethereum among its primary assets—are among those benefiting from these revised guidelines.

, introduced in September 2025, utilizes a covered call approach on Ethereum ETPs to provide investor income. GDLC, a portfolio of five major crypto assets weighted by market capitalization, allocates 16.52% of its holdings to Ethereum. Both funds carry expense ratios of 0.66% and 0.59%, respectively, and are traded on NYSE Arca.

This SEC decision comes after years of uncertainty regarding crypto ETP regulation. While the agency has not given universal approval to all Ethereum-related products, it has allowed Grayscale’s offerings to move forward within a framework that aims to foster innovation while protecting investors. This strategy reflects recent regulatory trends in the crypto sector, where authorities are addressing concerns about volatility, manipulation, and asset custody.

Experts observe that this approval marks a notable change in the SEC’s approach to digital assets, though hurdles persist. For example, the Grayscale Ethereum Covered Call ETF’s use of derivatives and active management adds layers of complexity that the SEC continues to scrutinize. The agency has also made clear that this approval does not rule out future regulatory changes as the market develops.

Grayscale’s Ethereum-focused funds have drawn considerable institutional attention. As of September 2025, the ETCO ETF managed $1.38 million in assets and reported robust trading activity, averaging 227,541 shares traded daily. At the same time, GDLC’s Ethereum share has benefited from rising interest in the second-largest cryptocurrency, whose market share has remained steady at about 16–17% throughout 2025.

This regulatory green light highlights Grayscale’s position as a link between conventional finance and the digital asset world. Managing over $744 million in assets tied to digital currencies, the company has established itself as a pioneer in compliant investment solutions. Nevertheless, the SEC’s ongoing oversight demonstrates its careful stance toward crypto products, especially considering previous enforcement actions against unauthorized digital asset offerings.