Grayscale Challenges SEC Over GDLC ETF Delay Amid Crypto Market Expansion

Grayscale Investments is pushing back against the U.S. Securities and Exchange Commission (SEC) after the agency unexpectedly paused the conversion of its Digital Large Cap Fund (GDLC) into a spot crypto ETF. Grayscale called the SEC’s stay order “unlawful” and warned it harms both the firm and its investors.

The asset manager submitted a formal letter to the SEC on Friday, criticizing the agency for halting the already-approved conversion without providing clear justification. Grayscale emphasized that the delay disrupts its efforts to expand investor access to regulated crypto products.

The proposed GDLC ETF would include a diversified mix of large-cap cryptocurrencies such as Bitcoin, Ethereum, XRP, Solana, and Cardano. Currently, Bitcoin accounts for roughly 80% of the fund’s holdings. The ETF would offer mainstream investors an easier, regulated way to gain exposure to multiple digital assets without handling custody or wallets.

The SEC has not publicly explained its decision, but experts believe internal procedural issues are likely behind the delay, rather than outright opposition to crypto. Notably, Solana has only one U.S. ETF, while XRP and Cardano lack individual funds altogether, potentially contributing to the regulatory caution.

Financial lawyer Scott Johnsson noted that despite the unusual move, Grayscale is likely to see GDLC approved eventually. He speculated that SEC Commissioner Caroline Crenshaw may have acted independently, issuing the stay as a final move before her expected departure.

If allowed to proceed, GDLC would become the first multi-asset crypto ETF in the U.S., marking a significant milestone in the integration of digital assets into traditional financial markets. Grayscale previously launched a spot Bitcoin ETF in January and aims to further bridge institutional finance and the crypto sector.