Grayscale is contesting the U.S. Securities and Exchange Commission's (SEC) decision to postpone the launch of its large-cap cryptocurrency ETF, deeming the agency's stay order unlawful and detrimental to investors. In a letter filed with the SEC on Friday, the asset manager responded to the unexpected pause on its plan to convert the Grayscale Digital Large Cap Fund (GDLC) into an exchange-traded fund (ETF), which the SEC had previously approved but then put on hold without explanation. Grayscale argues that the delay is causing harm to the company, the exchange, and the fund's current investors.
The proposed GDLC ETF would comprise a basket of prominent digital assets, including bitcoin, ether, XRP, solana, and cardano, with approximately 80% of the fund currently allocated to bitcoin. This conversion is part of Grayscale's broader strategy to introduce more cryptocurrency products to mainstream financial markets, following the successful launch of its spot bitcoin ETF in January. Although the SEC has not disclosed its reasons for the delay, market observers speculate that the holdup may be due to internal procedural issues rather than political opposition to cryptocurrency.
The ETF would track Bitcoin, Ethereum, Solana, Cardano, and XRP, with Cardano and XRP currently lacking individual ETFs and Solana having only one fund, despite several pending applications. According to Scott Johnsson, a financial lawyer and ETF expert, the SEC's move, although unusual, is unlikely to completely derail the fund. Johnsson suggests that the delay may be an isolated decision, and the fund is expected to launch eventually. If approved, the GDLC would be the first multi-asset cryptocurrency ETF in the U.S., providing investors with exposure to a curated selection of top digital currencies without requiring them to manage wallets or custody themselves.