The U.S. Securities and Exchange Commission (SEC) has halted the approval of Grayscale’s Digital Large Cap Fund to list as an ETF on NYSE Arca, pending further review.
Delay of Grayscale Approval
The SEC has delayed the approval of Grayscale’s Digital Large Cap Fund to list as an ETF on NYSE Arca. In a letter dated July 2, the SEC announced it would review the July 1 decision that granted accelerated ETF approval to Grayscale. The earlier approval, which came through delegated authority, is now stayed until the commission decides whether to uphold or reverse it.
History of Grayscale Fund
Launched in 2018 and trading over-the-counter under the ticker GDLC since 2019, Grayscale’s fund tracks the CoinDesk 5 Index and, at the time of approval, was composed of 80% Bitcoin, 11.4% Ethereum, 4.8% XRP, 2.8% Solana, and 0.8% Cardano.
Implications for the ETF Market
The delay adds uncertainty for Grayscale and other issuers looking to bring diversified crypto ETFs to market, such as Bitwise, Hashdex, and Franklin Templeton, who also have similar filings still pending. Until the regulatory commission makes a final decision, Grayscale’s Digital Large Cap Fund will remain in its current form and cannot begin trading as an ETF.
The halt in ETF approval for Grayscale highlights the ongoing challenges faced by cryptocurrency funds in obtaining regulatory approval, impacting the market as a whole.
