SEC Temporarily Stops Grayscale's Large Cap Crypto Fund ETF Transformation for Examination
In a recent turn of events, the U.S. Securities and Exchange Commission (SEC) has put a hold on the conversion of Grayscale's Digital Large Cap Fund (GDLC) into a spot exchange-traded fund (ETF) on NYSE Arca[1][2][3]. The fund, which includes major cryptocurrencies such as Bitcoin, Ethereum, Solana, XRP, and Cardano, was initially approved for conversion on July 1, 2025. However, the following day, the SEC invoked a stay order under Rule 431 of its Rules of Practice, suspending the conversion process[2][3][4].
The SEC's decision to review the delegated action that had approved the ETF conversion indicates a deeper examination of the classification and status of the altcoins included in the fund portfolio[1][2][3]. The review was initiated by the SEC itself, and at the time of writing, there is no clear timeline for when the review will conclude. Consequently, the fund's listing as an ETF on NYSE Arca remains suspended until the SEC issues further orders.
Meanwhile, the SEC is moving forward on universal crypto ETF listing standards, signalling a potential shift in regulatory approach towards cryptocurrencies[5]. Elsewhere, the FATF has called for stronger regulation after a substantial crypto theft amounting to $1.46 billion[6].
In other crypto-related news, Kraken has secured a MiCA license for EU crypto operations, while GUNZ has announced an expansion of its $GUN token to the Solana blockchain[7][8]. Additionally, Coinbase has added Sky and USDS to its listing roadmap, and Hong Kong brokerages have been approved for regulated crypto trading[9].
As the regulatory landscape for cryptocurrencies continues to evolve, stakeholders await the SEC's decision on the GDLC ETF conversion with interest. Spokespeople for Grayscale, the NYSE, and the SEC did not respond to requests for comment on the matter[10].
Sources: [1] https://www.coindesk.com/business/2025/07/02/grayscale-digital-large-cap-fund-gdlc-sec-approves-etf-conversion/ [2] https://www.coindesk.com/policy/2025/07/02/sec-pauses-grayscale-etf-conversion-amid-crypto-regulatory-scrutiny/ [3] https://www.reuters.com/business/us-biz/sec-pauses-grayscale-crypto-etf-approval-amid-crypto-regulatory-scrutiny-2025-07-02/ [4] https://www.sec.gov/rules/other/2025/34-91946.pdf [5] https://www.coindesk.com/policy/2025/07/05/sec-chair-gary-gensler-outlines-universal-crypto-etf-listing-standards/ [6] https://www.reuters.com/business/finance/fatf-calls-stronger-regulation-after-1-46-billion-crypto-theft-2025-07-01/ [7] https://cointelegraph.com/news/gun-token-expands-to-solana-blockchain [8] https://www.coindesk.com/business/2025/07/05/kraken-secures-mica-license-for-eu-crypto-operations/ [9] https://www.coindesk.com/business/2025/07/06/hong-kong-brokerages-approved-for-regulated-crypto-trading/ [10] https://www.bloomberg.com/news/articles/2025-07-02/grayscale-s-crypto-fund-etf-approval-put-on-hold-by-sec-sources-say
- Despite the temporary halt in the conversion of Grayscale's Digital Large Cap Fund into an exchange-traded fund, the SEC's review of the approval could potentially reshape the classification and status of altcoins in finance.
- As the SEC advances universal crypto ETF listing standards, there's a growing sense that technology companies and businesses dealing with cryptocurrencies may soon face stricter regulatory scrutiny in the future.
- Meanwhile, other cryptocurrency-related businesses, such as Kraken, GUNZ, Coinbase, and Hong Kong brokerages, continue to expand their operations, demonstrating the ongoing investment in and interest in the technology despite regulatory uncertainty.
