SEC Reviews Grayscale’s GDLC ETF Approval Amid Regulatory Scrutiny

The U.S. Securities and Exchange Commission (SEC) is reviewing its recent approval of Grayscale’s move to convert its Digital Large Cap Fund (GDLC) into an exchange-traded fund (ETF), according to a letter dated July 1.

Originally approved through delegated authority—meaning SEC staff, not commissioners, signed off—the uplisting of GDLC allowed the $755 million crypto fund to be listed as an ETF. GDLC holds a diversified basket of major digital assets including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA), and is benchmarked to CoinDesk’s CD5 Index.

However, under Rule 431 of the SEC’s Rules of Practice, the agency has now decided to review that delegated action. The letter, addressed to the New York Stock Exchange (NYSE), states that the July 1 order is "stayed until the Commission orders otherwise." This means the approval is temporarily paused while commissioners review the decision. It remains unclear which commissioner initiated the review.

While any commissioner can request a review of a staff-level decision, such reversals have historically applied to ETF disapprovals rather than approvals. The SEC did not provide a timeline for the review or detail next steps but promised to inform the NYSE of any future actions.

Grayscale and NYSE representatives did not immediately comment on the development. The SEC also declined to elaborate on the matter.

This development adds regulatory uncertainty for crypto ETFs, even as interest in digital asset investment vehicles continues to grow. With institutional investors increasingly exploring crypto exposure through ETFs, the outcome of this review could have broader implications for the digital asset industry.