- Just days after approving Grayscale’s multi-crypto ETF, Grayscale Digital Large Cap (GDLC), the SEC has announced it will be reviewing the decision, delaying the ETF’s listing indefinitely.
- The approval of GDLC was initially made using delegated authority, meaning SEC staff members made the decision. The review will allow the regulator’s commissioners to examine the decision more closely.
- It’s widely believed the purpose of the review is to give the SEC time to clarify the administrative process around the future approval of similar multi-crypto ETF products.
The US Securities and Exchange Commission (SEC) has announced in a letter dated July 1 that it intends to review its earlier approval of Grayscale’s basket crypto exchange-traded fund (ETF), the Grayscale Digital Large Cap Fund (GDLC).
“This letter is to notify you that, pursuant to Rule 431 of the Commission’s Rules of Practice, 17 CFR 201.431, the Commission will review the delegated action,” the SEC wrote to GDLC’s listing partner, the New York Stock Exchange. “In accordance with Rule 431(e), the July 1, 2025 order is stayed until the Commission orders otherwise.”
A spokesperson for Grayscale said the review of GDLC’s listing was “unexpected” but it was committed to pursuing the listing, and was working with key stakeholders to meet all necessary requirements.
While this development was unexpected, it reflects the dynamic and evolving nature of the regulatory landscape surrounding a first-of-its-kind digital asset product like GDLC.
GrayscaleGDLC — which comprises a basket of the top 5 cryptocurrencies by market cap excluding stablecoins (BTC, ETH, SOL, XRP and ADA) — was approved last Tuesday through delegated authority. That means the decision was made by regular SEC staff members rather than through a vote by the commissioners.
It’s not unusual for commissioners to request a review of decisions made through delegated authority, and many believe GDLC’s review is likely related to ironing out administrative issues rather than political concerns.
Related: SEC Fast-Tracks Approval of Grayscale ETF Holding BTC, SOL, XRP and Others
GDLC Delay Likely Temporary
Sources with knowledge of the SEC’s decision-making process reportedly told CoinDesk that the primary purpose of the review is to give the SEC time to develop standards and guidelines for the approval of other similar crypto basket ETF products.
There could also be issues related to the fact that two of the cryptocurrencies contained in GDLC — XRP and ADA — don’t have their own ETFs yet, although both currently have ETF applications working their way through the approvals process.
Posting on X, Bloomberg Intelligence ETF analyst James Seyffart lent support to these explanations, proposing two theories.
The SEC doesn’t want to let anything to launch under the 19b-4 process until they officially approve or come up with some framework for digital assets in the ETF wrapper.
James Seyffart, BloombergAlternatively, the Bloomberg analyst said it could be some sort of issue specific to GDLC: “The 2nd theory is that there’s something the SEC wants to work on in relation to a specific aspect of $GDLC itself (like its structure?).”
Seyffart said he remains confident GDLC will eventually be listed, writing “it can’t convert *YET* but it will. We just don’t know when and we don’t exactly know why the SEC issued this ‘Stay’ order.”
Related: Bitcoin ETF Blitz: BlackRock’s IBIT Tops S&P 500 Giant in Fee Take
Seyffart’s colleague at Bloomberg, Senior ETF analyst Eric Balchunas, shared a similar view on X:
“The plot thickens. Upper level of SEC telling $GDLC it can’t launch until otherwise notified. Not sure why, no other info than this letter. My guess tho: They want to issue the crypto ETP listing standards before any ’33 act spot ETFs hit market with these other coins. So likely just a delay till then, but we’ll see!”
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