It only took one day for the Securities and Exchange Commission (SEC) to turn it back into the approval given to the Grayscale Digital Large Cap Fund (GDLC) into an exchange sales fund (ETF) and accidentally halted the release.
On July 1, 2025, the SEC shared a letter indicating its intention to reconsider the recent approvals granted to GDLC and reconsider its intention to convert the fund into an ETF.
The SEC approval of Grayscale ETFs was hailed as a groundbreaking development for a US multi-asset cryptographic ETF. For beginners, grayscale brings a regulatory structure to products that track Bitcoin, Ethereum, and other major tokens by converting multi-asset crypto funds.
The initial approval of regulatory bodies indicates that the authorities are confident in preparing the product for the market. Nevertheless, it has decided to call Rule 431 of the SEC Rules of Practice to consider previous decisions.
Issues like breaking news from yesterday
– Despite initial clearance from SEC, I recently paused with plans to convert Grayscale’s Digital Large Cap Fund to ETF
A temporary pause does not necessarily mean rejection. It triggers more reviews.
– 🐍Salazar.ETH (@0xSalazar) July 3, 2025
The GDLC fund holds $755 million in Bitcoin, Ethereum, Solana, XRP and Cardano. According to some analysts, staff at the SEC agency approved the approval, not the commissioner, so it’s a callback.
In a letter to the New York Stock Exchange (NYSE), the SEC said: “This letter is to inform you that you will be reviewing the mandatory action in accordance with Rule 431 of the Committee’s Rule 17 CFR 201.431.”
Furthermore, “According to Rule 431(e) of July 1, 2025, the order will remain until the Commission orders.”
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Altcoin Exposure eliciates rare SEC reviews for grayscale ETF applications
The GDLC fund launched in 2018 includes a variety of cryptocurrencies, with over 91% of its holdings invested in Ethereum and Bitcoin. The rest consists of altcoins such as XRP, Solana, Cardano.
GDLC also includes cryptocurrencies established based on market size and adjusts changes quarterly. If approved, GDLC is a public ETF that allows investors to hold multiple crypto assets in one place.
Historically, such reversals are rare. They often manage ongoing internal discussions about investor protection, regulatory consistency and market stability. Altcoins pose varying degrees of risk, which could have been a trigger for SEC committee members to refuse staff-level approval.
The inclusion of assets like XRP and Solana is still controversial, but it may have sparked concerns about the legal treatment of underlying tokens and the clarity of disclosure as multi-asset products such as Grayscale.
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Bloomberg analysts believe the SEC is reevaluating the Grayscale ETF to develop clearer rules
Some analysts, such as Bloomberg’s Eric Barkunass, believe the SEC is reevaluating grayscale ETFs and developing clearer rules before allowing more complicated crypto funds. Baluchnas also speculates that regulators are waiting for a consistent standard for crypto investment products before giving a green signal to GDLC’s ETFs.
The plot becomes thicker. Highest Level of Seconds $ gdlc You cannot start it unless you are notified otherwise. I don’t know why, there is no information other than this letter. My guess: They want to issue Crypto ETP list criteria before the ’33 ACT Spot ETFs make it to the market with these other coins. It’s highly likely… https://t.co/za7ryk1o0e
– Eric Balchunas (@ericbalchunas) July 2, 2025
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Key takeout
The GDLC fund holds $755 million in Bitcoin, Ethereum, Solana, XRP and Cardano
Bitcoin and Ethereum account for more than 91% of the GDLC fund portfolio
Multi-asset products such as Grayscale add levels of structural and legal complexity, as opposed to single-asset ETFs
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