April 30, 2025, Washington—When the breakthrough approval of the Bitcoin spot ETF in 2024 thrilled the crypto industry, few anticipated that the journey for non-Bitcoin asset ETFs would be so tortuous. Since March 2025, the U.S. Securities and Exchange Commission (SEC) has repeatedly delayed the approval of more than a dozen spot ETF applications, including those for XRP, Solana, Litecoin, and Dogecoin, triggering severe turbulence in the global crypto market. This tug-of-war, dubbed the 'regulatory test' by the industry, not only exposes the deep contradictions between the traditional financial system and the crypto ecosystem but also reveals the strategic choices and survival rules for blockchain projects in the compliance process.
1. Event retrospective: The SEC's 'delay art' and the butterfly effect on the crypto market.
According to the latest disclosed regulatory documents, the SEC's delay involves eight applications submitted by institutions including Grayscale, VanEck, and Canary, which include tokens from smart contract platforms such as Cardano and Solana, as well as payment tokens like XRP and Litecoin. Market data shows that after the announcement, relevant tokens generally fell by 8%-15% within 24 hours, with XRP's price temporarily dropping below the psychological threshold of $2.2, and the total liquidation amount across the network exceeding $1.2 billion.
This market reaction is highly similar to the historical peaks before the approval of the Bitcoin ETF in 2024: at that time, the SEC also extended the review period through a 'multi-stage delay' strategy, forcing applicants to continually supplement technical compliance details. For example, Grayscale spent 240 days perfecting the custody plan for its Bitcoin Trust conversion to ETF, while the applicants for the Solana ETF must additionally submit on-chain monitoring tools to prove market resistance to manipulation. The regulators clearly hope to replicate this model, using time pressure to compel the industry to enhance compliance levels.
2. Deep game: Three core controversies tearing apart regulatory consensus
Behind the SEC's cautious attitude lies a structural conflict between the characteristics of crypto assets and traditional financial rules:
1. The securities property dispute: The regulatory aftershocks of the XRP lawsuit
Although Ripple Labs won the lawsuit against the SEC in 2023, with the court ruling that XRP is not a security in secondary market transactions, its institutional sales model still exists in a legal gray area. This 'disjointed ruling' puts the SEC in a dilemma when approving the XRP ETF: if it acknowledges its non-security status, it may weaken its regulatory authority over other tokens; if it insists on the accusations, it faces the risk of judicial backlash. A similar predicament also arises with Solana—the SEC has hinted that its early token issuance may involve securities violations, while ecosystem developers emphasize the network's decentralized characteristics.
2. Market manipulation dilemma: The 'compliance paradox' of on-chain data
The SEC requires spot ETF applicants to prove that the underlying asset market possesses sufficient liquidity and anti-manipulation features, which has sparked a technical arms race in the crypto industry. Taking Litecoin as an example, Canary Capital introduced a real-time on-chain trading monitoring system to meet regulatory requirements, which can track over 87% of LTC's trading volume. However, this also exposes a paradox: the anonymous nature of blockchain fundamentally conflicts with the demand for regulatory transparency, and excessive monitoring may undermine the core value proposition of crypto assets.
3. Political variable disturbances: Regulatory restructuring under Trump's new policies
With the Trump administration promoting the 'Digital Asset Strategic Reserve' plan, SEC personnel appointments have become a key variable. Current Chairman Gary Gensler's hardline stance contrasts sharply with the crypto-friendly tendencies of new nominee Paul Atkins. Industry insiders predict that if pro-crypto factions come to power, the SEC may adopt a 'classification exemption' strategy for non-Bitcoin ETFs, prioritizing the approval of tokens not explicitly defined as securities (such as Litecoin, Dogecoin), while placing contentious assets (such as XRP, SOL) on a 'watch list.'
3. Ecological impact: From 'barbaric growth' to 'institutional entry'
Market turbulence caused by approval delays is reshaping the survival logic of blockchain projects:
1. Institutional differentiation: Compliance premium gives rise to 'new species'
Leading projects accelerate the layout of regulatory tools:
• Technical compliance layer: The Solana Foundation announced an investment of $50 million to develop 'regulatory-friendly' verification nodes, providing real-time access to on-chain data interfaces for the SEC;
• Legal framework layer: Ripple plans to migrate the XRP liquidity pool to a custodial institution that has obtained a BitLicense in New York;
• Capital operation layer: Grayscale partnered with Coinbase to launch the 'ETF Pre-Compliance Index' to help investors position themselves in potentially approved token combinations.
2. Marginal elimination: The 'regulatory death spiral' of small and medium-sized projects
Projects lacking resources to cope with compliance costs face survival crises. Data shows that in Q1 2025, global blockchain startup funding fell by 34% year-on-year, with 80% of failure cases involving an inability to meet the SEC's KYC/AML requirements. Some privacy protocols (like Monero, Zcash) have even been forced to abandon the U.S. market, turning to offshore jurisdictions with looser regulations.
3. Ecological migration: From 'code autonomy' to 'regulatory symbiosis'
This crisis is changing the narrative of blockchain's value. Ethereum co-founder Vitalik Buterin recently publicly called for, 'We need to rethink the compatible paths between decentralization and regulation—perhaps future smart contracts must be built with compliance modules.' This concept has already been implemented in the new generation of public chains (such as Sui, Aptos), whose on-chain KYC systems and regulatory sandbox mechanisms have received preliminary recognition from the SEC.
4. Future extrapolation: The triple path of crypto compliance from 2025 to 2030
Based on the current regulatory dynamics and technological evolution, the industry may head toward three paradigms:
1. Conservative path: Bitcoin standard
If the SEC continues to suppress non-Bitcoin ETFs, the market may form a dual-track structure of 'Bitcoin ETF + other token OTC derivatives.' In this model, Bitcoin is recognized as 'digital gold,' while other tokens retreat to being high-risk speculative assets, with the impetus for compliance innovation dwindling.
2. Gradual reform path: Classification regulatory system
Referencing China's (Blockchain Financial Application Security Specifications) experience, the U.S. may establish a token classification system:
• Tier 1 assets (Bitcoin, Litecoin): Enjoy privileges such as ETFs and tax deductions;
• Tier 2 assets (Ethereum, Solana): Must meet specific decentralization indicators to apply for financial products;
• Tier 3 assets (privacy coins, Meme coins): Institutional participation is restricted, and trading is limited to qualified investors.
3. Radical innovation path: Compliance on-chain ecology
Achieving regulatory transparency through technologies such as zero-knowledge proofs and homomorphic encryption while protecting privacy. For example, the 'regulatory-friendly ZK-Rollup' solution developed by Polygon allows institutions to audit on-chain activities in real-time without exposing user identities. This technological breakthrough could give rise to a new generation of 'regulatable public chains,' fundamentally restructuring the interaction between blockchain and sovereign regulation.
Conclusion: Finding light in the cracks of order
The SEC's approval delays are by no means just regulatory obstacles but are the inevitable growing pains for the crypto industry transitioning from its grassroots phase to mainstream acceptance. As Coinbase CEO Brian Armstrong said, 'We are witnessing an epic institutional experiment—when code meets law, and when decentralization meets state machinery, the balance of compromise and innovation will determine the shape of digital civilization for the next decade.'
For blockchain projects, this crisis is also an opportunity: only by internalizing compliance as a technological gene and exploring the boundaries of innovation within the regulatory framework can they seize the initiative in the new round of digital revolution. After all, history has never rewarded the fastest runners, but those survival experts who remain agile amid rule changes.
