The SEC suspends Grayscale’s GDLC ETF, despite approval the day before by delegation.
The fund comprises $755M of BTC, ETH, XRP, SOL, and ADA.
It’s the first time an ETF combining several cryptos has been approved, but also the first time the SEC has halted a crypto ETF launch after approval.
An approval…suspended the next day
It’s the story of a green light turning into a blinking orange. Less than 24 hours after approving, via delegation, the conversion of the Grayscale Digital Large Cap Fund (GDLC) into an ETF, the SEC backtracks. The agency’s commissioners have just announced a “review” of this decision, immediately freezing its debut on the NYSE.
The fund, with nearly $755 million, includes several of the largest cryptos in the market: Bitcoin, Ethereum, XRP, Solana, and Cardano. An enticing basket for investors, suddenly much less accessible…overnight.
Delegation or political decision?
The initial authorization was not voted on by the commissioners but validated by the SEC’s technical teams, a process known as “delegated authority“. A common but risky practice on sensitive issues.
When it comes to crypto ETFs, any decision sends ripples through the markets. This suspension underscores that the issue remains highly political, despite recent progress on spot ETFs for Bitcoin, Ethereum, and even Solana.
Who requested the review? A mystery. The official letter reveals nothing. But as per Rule 431 of the SEC’s internal regulations, a single commissioner’s dissent is enough to trigger an immediate freeze.
Grayscale back in the crosshairs
The company is no stranger to battles with the SEC. In 2022, it sued the agency after a rejection of a Bitcoin ETF, a case it won, leading to the launch of these historic products. But this time, the situation is different: it’s not a flat-out rejection, but a proper postponement.
Grayscale and the New York Stock Exchange have not yet commented on the decision. But investors are holding their breath. This suspension could last a few days…or several weeks.
A worrying sign for multi-asset ETFs?
This issue goes beyond Grayscale. It’s the first time an ETF combining several major cryptos was set to enter the US market, also the first time the SEC halted a crypto ETF launch after internal approval.
The GDLC is based on the CoinDesk 5 Index, a respected industry benchmark. Its freeze sends a clear message: multi-asset crypto ETFs have not completely won over Washington.
In a landscape where regulators teeter between cautious openness and lingering suspicion, this decision could deter other players poised to launch similar products.
