- SEC pauses Grayscale GDLC ETF approval just one day after green light and triggers an automatic stay.
- Unclear legal status of altcoins like XRP and Solana may have delayed the multi-asset ETF launch.
- SEC may be working on a new crypto ETF rule before allowing mixed asset funds to enter the market.
The U.S. Securities and Exchange Commission has paused the approval of Grayscale’s Digital Large Cap Fund ETF. The decision came just one day after the SEC’s Division of Trading and Markets granted GDLC approval. The ETF would have traded on NYSE Arca under a revised rule. That approval was issued on an accelerated basis which reflects confidence in the product’s readiness.
However, the Commission then exercised its right to review the decision under Rule 431. This action triggered an automatic stay. As a result, the GDLC fund cannot proceed with its conversion to an exchange-traded product. The SEC has not announced a review timeline or any next steps.
Legal Status of Altcoins May Raise Concerns
The GDLC fund, which it sought to turn from last year, holds a basket of top cryptocurrencies. Bitcoin and Ethereum make up over 90% of the Grayscale ETF portfolio. Altcoins, such as XRP, Solana, and Cardano, constitute the other 10% of the portfolio. These assets face ongoing regulatory uncertainty in the U.S.
Unlike single-asset ETFs, multi-asset products introduce added complexity. This includes legal questions around classification and investor disclosures. The Commission’s intervention may reflect concerns tied to the unsettled status of certain tokens. While Ethereum has already received spot ETF approval, other altcoins have not. This imbalance could impact the fund’s regulatory standing.
Regulatory Framework
Market observers believe the stay could signal a broader regulatory strategy. The SEC may seek a more consistent framework before allowing multi-asset crypto ETFs. This could involve coordinated approvals of single-asset ETFs for altcoins. Doing so would help standardize listing rules and promote fairness among issuers.
Some analysts expect altcoin spot ETFs to gain approval by the end of 2025. Until then, their inclusion in the GDLC ETF may delay broader product acceptance. The SEC’s decision appears to align with this cautious path.
Future of Fund Tied to Ongoing Regulatory Work
The fund’s structure would have introduced in-kind redemption and shifted away from a closed-end format. Grayscale aimed to offer diversified exposure while keeping Bitcoin at the core. The GDLC fund holds $775 million in assets under management. Bitcoin makes up nearly 80%, while Ethereum contributes about 12%.
The Commission is reportedly working with exchanges to develop new listing standards. These rules could cover token liquidity, volume, and market cap. If finalized, they may eliminate the need for product-by-product approval under Rule 19b-4. Grayscale’s ETF remains in regulatory limbo as the SEC shapes its digital asset policy.
