03.07.2025 02:56

Grayscale's ambitious plan to transform its Digital Large Cap Fund into an exchange-traded fund (ETF) has unexpectedly hit a snag. A day after receiving seemingly positive regulatory signals, the Securities and Exchange Commission (SEC) issued a stay order, halting the conversion process. This surprising development throws a significant wrench into Grayscale's strategy and the broader crypto ETF landscape.

The SEC's action, communicated directly to the New York Stock Exchange (NYSE), effectively freezes the proposed conversion. Their stated reason involves a necessary review of the previously granted approval, raising concerns about the regulatory scrutiny applied to this groundbreaking initiative. The fund, which holds a diversified portfolio of cryptocurrencies including Bitcoin, Ethereum, Solana, XRP, and Cardano, was poised to be the first spot ETF offering exposure to ADA and XRP, marking a significant step for the industry. The SEC's stay order will remain in place until further notice. Information from the US SEC website confirms this unexpected turn of events.


Consequently, Grayscale's much-anticipated ETF will not launch on the NYSE as originally planned. The future listing remains uncertain, pending further directives from the SEC. Speculation surrounding the reasons for this sudden reversal abounds.

According to James Seyffart, a Bloomberg analyst, the SEC's decision might stem from a broader strategic objective. One interpretation suggests the Commission intends to solidify a regulatory framework for digital asset ETFs before approving any new listings under Rule 19b-4. This includes collaboration with exchanges to create standardized listing procedures for crypto ETFs, facilitating a more streamlined approval process going forward. This proactive approach, although delaying Grayscale's ambitions, could ultimately benefit the entire crypto investment ecosystem by establishing a clearer and more efficient path for future ETF approvals.