Grayscale Investments has reached out to the U.S. Securities and Exchange Commission (SEC) urging it to grant final approval for its spot ETF, which is based on a basket of five major crypto assets. The request comes in response to delays from the regulator regarding the conversion of the Grayscale Digital Large Cap Fund LLC (GDLC) into an exchange-traded fund, which the company claims is causing financial losses for both itself and its investors.
This is reported by Finway
Reasons for the Delay in ETF Approval
The SEC initially granted permission for the conversion of GDLC into a spot ETF but later suspended the process. The fund is focused on investments in cryptocurrencies such as Bitcoin, Ethereum, Solana, Cardano, and XRP, making it one of the first such products in the U.S. market. Bloomberg Intelligence analysts believe that the delay may be related to specific concerns the SEC has regarding the Grayscale product or the regulator’s desire to develop a comprehensive framework for altcoin-based ETFs.
Grayscale’s Arguments and SEC’s Response
In an official letter to the SEC, Grayscale emphasizes that further postponement of the fund’s launch harms not only the company but also current investors. The company cites Section 19(b)(2)(D) of the Exchange Act, which establishes a maximum timeframe for reviewing such applications—240 days. The SEC’s Trading and Markets Division approved the conversion of GDLC on July 1, which was the 239th day since the application was submitted. Grayscale’s attorneys consider any further delays to be unlawful.
“Grayscale, the exchange, and current investors in the trust are suffering losses due to the delay in the public launch, and therefore we are considering filing a petition with the Commission to lift the moratorium imposed by Rule 431(e) while the Commission reviews the actions taken by delegated authority so that the fund can begin operations immediately while this review is ongoing.”
It is worth noting that Grayscale Investments submitted its application to convert its GDLC trust in October 2024. A month and a half later, a similar application for a mixed spot cryptocurrency ETF was submitted by Bitwise. If Grayscale’s application is approved, its GDLC fund could become one of the first such ETFs in the American market.
At the time of preparing this material, the SEC had not officially commented on the situation regarding the delay in approving Grayscale’s ETF.