The　grounding　of　low　frequency　distribution　transformer　is　a　critical　concern　which　ensures　the　proper　operation　and　protection　of　the　distribution　system.　The　power　electronic　transformer　(PET),　as　a　future　alternative　of　low　frequency　distribution　transformer,　also　needs　to　consider　the　grounding.　This　paper　is　studying　the　operation　of　PET　with　arc　suppression　coil(ASC)　grounding　in　the　Y-connected　medium-voltage(MV)　stage.　The　study　focus　on　two　aspects:　1.　The　MV　stage　current　stress　brought　by　ASC　is　analyzed　and　a　negative　sequence　current　compensation　method　is　proposed　to　reduce　the　MV　stage　current　stress;　2.　The　ASC　impedance　adjustment　range　that　MV　stage　can　provide　is　analyzed　and　a　virtual　impedance　method　is　proposed　to　achieve　this　adjustment.　The　effectiveness　of　the　proposed　ASC-PET　as　well　as　its　control　strategy　is　verified　by　both　simulation　and　experiment　results.　IEEE