SEC’s Suspension of Grayscale Fund (GDLC) Appears to Be Short-Term

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The U.S. Securities and Exchange Commission likely halted the launch of the Grayscale Digital Large Cap Fund (GDLC) for administrative reasons, rather than political ones, according to multiple individuals familiar with the matter. The SEC approved GDLC to uplist as an exchange-traded fund (ETF) on Tuesday through staffers’ delegated authority, meaning the regulator’s commissioners did not need to vote on the application. However, the SEC notified Grayscale and the New York Stock Exchange — GDLC’s listing partner — on Wednesday that the SEC’s commissioners would be reviewing the approval, temporarily pausing GDLC’s go-live date.

GDLC is based on CoinDesk Indices’ CoinDesk 5 Index. Halting the launch allows the SEC time to establish listing standards for other ETFs that would launch under the same mechanism. Additionally, GDLC includes two digital assets — XRP and Cardano — that currently lack their own individual ETFs. Bitcoin and Ethereum have had their own ETFs since 2024, and the SEC has previously approved funds containing those assets. Solana also saw its first ETF launch earlier this week, while applications for other ETFs linked to the asset are still under SEC review.

The SEC faces deadlines later this year for the XRP, ADA, and SOL applications. James Seyffart, an ETF analyst, remarked that the SEC’s pause was “not normal.” He suggested two potential reasons for this move: either the SEC wants to ensure that nothing launches under the 19b-4 process until they officially approve or develop a framework for digital assets within the ETF context, or they want to address specific aspects of the fund itself, such as its structure.

In a statement, a Grayscale spokesperson expressed that the SEC’s pause was “unexpected” but “reflects the dynamic and evolving nature of the regulatory landscape surrounding a first-of-its-kind digital asset product like GDLC.” They further stated, “Grayscale remains committed to pursuing the listing of GDLC as an ETP and we are working closely with key stakeholders to meet all necessary requirements. We will provide further updates as additional information becomes available.” An 8-K filing from Grayscale indicated that the firm “remains committed to pursuing the listing of the Fund on NYSE Arca and continues to work closely with key stakeholders to obtain approval of the application.”