SEC Puts Brakes on Grayscale’s New ETF GLDC Just After Approval

Key Takeaways

• The SEC initially approved Grayscale’s Digital Large Cap Fund (GDLC) ETF conversion, then abruptly hit pause with a surprise “stay” order.
• Analysts suspect the move may reflect internal disagreements within the SEC.
• While spot Bitcoin and Ethereum ETFs have been cleared, the SEC remains cautious regarding altcoin-heavy funds.

A sudden regulatory U-turn is raising eyebrows across the crypto industry.

Just as Grayscale appeared to secure another win in its push to convert crypto trusts into exchange-traded funds (ETFs), the Securities and Exchange Commission (SEC) quietly pulled back, casting fresh uncertainty over the future of altcoin-based funds.

SEC Pauses Grayscale Funds Approval

The SEC unexpectedly halted its approval of Grayscale’s Digital Large Cap Fund (GDLC) ETF one day after greenlighting the conversion.

The GDLC fund holds a blend of crypto assets, including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA).

On Tuesday, the SEC’s Division of Trading and Markets gave the go-ahead for an accelerated ETF conversion, but the agency issued a stay the next day, delaying implementation indefinitely.

According to Bloomberg analysts James Seyffart and Eric Balchunas , the pause likely signals unresolved concerns about ETFs with altcoin exposure.

The SEC may want to firm up its internal framework before allowing non-Bitcoin and Ethereum products.

There’s also speculation about bureaucratic infighting. The approval came from one division of the SEC, but may have faced pushback elsewhere within the agency.

While altcoin ETFs like Solana and XRP have yet to gain approval, analysts still expect progress by the end of the year.

Seyffart and Balchunas continue to assign 95% odds to top altcoin ETFs being approved in 2025.

Not the First Clash

This isn’t the first clash with the SEC.

In 2023, the firm won a landmark court battle after a judge ruled the SEC had acted “arbitrarily and capriciously” in rejecting its Bitcoin trust conversion.

That decision led to the launch of Grayscale’s Bitcoin ETF, now one of the top BTC investment products, though it still carries a hefty 1.5% management fee.