In a surprise move, the U.S. Securities and Exchange Commission (SEC) has temporarily halted the conversion of Grayscale’s Digital Large Cap Fund ($GDLC) into a spot crypto exchange-traded fund (ETF), just one day after granting initial approval.
The stay was announced in a letter sent to the New York Stock Exchange on Wednesday by SEC Deputy Secretary J. Matthew DeLesDernier. While the agency’s Division of Trading and Markets had greenlit the conversion, the commission invoked Rule 431(e) to delay the final go-ahead, stating, “The July 1, 2025 order is stayed until the Commission orders otherwise.”
The Grayscale Digital Large Cap Fund, currently trading over-the-counter and open to accredited investors, holds nearly 80% in Bitcoin, about 11% in Ethereum, and smaller allocations to Solana, Cardano, and XRP, making it one of the most diversified crypto funds seeking an ETF structure.
Grayscale has yet to comment publicly on the development. Meanwhile, an SEC spokesperson declined to discuss specific fund matters.
The move has stirred speculation across the crypto industry. Bloomberg ETF analyst James Seyffart noted in a post,
“While @Grayscale was given an approval order for their conversion of $GDLC into an ETF yesterday, there was a letter attached to that approval that is putting a Stay on their ability to actually convert at this time.”
He added that the delay may signal the SEC’s intent to finalize a broader framework for digital asset ETFs before allowing any spot crypto ETFs under the ’33 Act to go live.
Another theory suggests internal disagreement among SEC divisions over the structural components of $GDLC. “Perhaps another division isn’t ready to let this convert just yet,” Seyffart speculated.
ETF expert Eric Balchunas echoed similar concerns, tweeting, “My guess tho: They want to issue the crypto ETP listing standards before any ’33 act spot ETFs hit market with these other coins. So likely just a delay till then, but we’ll see!”
The SEC is currently reviewing multiple crypto ETF applications, including those tied to SOL, XRP, and DOGE, as market demand grows for diversified crypto investment vehicles.
While $GDLC’s conversion may still be on the horizon, the timeline remains uncertain, fueling ongoing debate about the SEC’s evolving stance on crypto ETF regulation.
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