The legal team of asset management firm Grayscale called out the United States Securities and Exchange Commission (SEC) on its decision to delay the listing of the firm’s Digital Large Cap Fund (GDLC) on the New York Stock Exchange. As Bitcoinist reported earlier, the conversion of GDLC, which contains Bitcoin, Ether, XRP, Solana, and Cardano, into an exchange-traded fund (ETF) was “stayed” indefinitely 24 hours after the SEC’s Division of Trading & Markets approved the fund’s listing. Grayscale To Petition SEC On Multi-Asset ETF In a July 8 letter , the Grayscale attorneys expressed their displeasure at the decision of the Office of the Secretary to delay the conversion of the GDLC to an ETF. According to the commission, the purpose of this “stay” decision is to review the delegated action of listing Grayscale’s Digital Large Cap Fund on the New York Stock Exchange. Bloomberg Intelligence ETF analyst James Seyffart posited, at the time the news of the delay broke out, that the SEC could be holding out on all multi-coin ETF launches till it completes a comprehensive digital-asset ETP framework. “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?) The 19b-4 approval order comes from the division of Trading & Markets. Perhaps another division isn’t ready to let this convert just yet,” Seyffart added at the time. However, the messaging of Grayscale’s letter suggested that the asset manager’s patience is running thin with the commission. The attorneys of Grayscale hinted that the parties involved in the conversion are considering submitting a petition requesting that the stay on the GDLC listing be lifted temporarily. The letter read: The consequences of a failure to meet the statutory approval or disapproval deadline, regardless of the reason, are clear: under Section 19(b)(2)(D), the rule proposal is deemed approved. Grayscale, the Exchange and the Fund’s current investors are suffering harm as a result of the delay in public launch of the Fund, and Grayscale and the Exchange are therefore considering whether to file a petition requesting the Commission to lift the stay imposed by Rule 431(e) while the Commission reviews the action taken by delegated authority, so that the Fund may promptly launch while that review proceeds. Grayscale concluded the letter by acknowledging the progress made by the Commission regarding regulatory clarity in the digital asset industry. “Grayscale appreciates the Commission’s efforts to provide regulatory clarity and intends to continue to engage cooperatively with the Commission in furtherance of the shared goal of regulatory clarity and to serve as a resource to the Commission on crypto-related matters,” the asset manager added. GDLC ETF Launch Just A Matter Of Time: Expert Scott Johnsson, an expert in finance law, shared their opinion on the developments between Grayscale and the US SEC regarding the Digital Large Cap Fund’s conversion. Despite the somewhat technical complexities, the finance expert expects the GDLC to launch as an exchange-traded fund in due time. Johnsson said on X: Given Grayscale was suggesting they had productive talks with the SEC prior to approval, and they had made extensive amendments to the rule proposal in line with those discussions, my guess is the Rule 431 application was a parting gift from Crenshaw acting unilaterally. SEC then had to deal with the mess. This is going to launch, its just a matter of when imo. While the Bitcoin and Ethereum spot exchange-traded funds started trading in 2024, the US SEC is still sitting on a group of ETF applications for other crypto assets, including Solana, XRP, DOGE — to name a few.
