Grayscale challenges SEC stay on approval of BTC, ETH, XRP, ADA large-cap fund

Key Takeaways

Grayscale challenges the SEC’s authority to delay approval beyond set limits.
Grayscale says the fund’s investors are suffering harm due to the postponed public launch.

Grayscale Investments is challenging the SEC’s stay on the approval order for listing and trading shares of its Grayscale Digital Large Cap Fund LLC (GDLC) on NYSE Arca.

The fund, which provides exposure to Bitcoin, Ethereum, XRP, Solana, and Cardano, was approved by the SEC’s Division of Trading and Markets on July 1.

However, shortly afterwards, the Commission notified the exchange that the approval would be stayed due to a pending internal review.

In a letter sent to the SEC this week, Grayscale’s lawyers argued that the fund’s approval should stand by default as the SEC missed its legal deadline to act on the proposal, and that under federal law, the fund should be considered automatically approved.

The team also said the SEC can’t use its internal processes to ignore the legal deadline, and that putting approval on hold indefinitely goes against the rules set by Congress.

“The Commission could, on an appropriate record, stay or override an act of the Commission itself, perhaps even a deemed act. But that would be outside the scope of Rule 431, which concerns only Commission consideration of actions made pursuant to delegated authority, and could not override the 240-day outside deadline established by Congress in Section 19(b)(2) for the Commission to finalize its decision. The Commission’s internal housekeeping rules cannot be used to skirt an act of Congress,” Grayscale’s legal representatives stated.

Grayscale stressed that the delay is hurting GDLC, arguing they’re being unfairly impacted by the SEC’s procedural pause.

The asset manager and NYSE Arca are considering whether to formally petition the SEC to lift the stay and allow the fund to launch. However, the entities urged the Commission to voluntarily recognize that the approval became legally final on July 2.

Despite the setback, the team noted that it acknowledged recent positive developments at the SEC, including the formation of a Crypto Task Force, and reaffirmed its willingness to work cooperatively with the agency.

Grayscale ETF still on track despite sudden SEC setback

According to Scott Johnsson, General Partner at VB Capital, the delay wasn’t due to any major issues with Grayscale’s proposal. The last-minute delay may have been caused by Commissioner Crenshaw, who has expressed skepticism about crypto in the past.

Crenshaw may have raised an objection just before the approval was finalized, forcing the rest of the SEC to address the situation. However, Johnsson believes the pause is likely a procedural hiccup and the fund will debut soon.

This is why (sometimes) lawyers are worth it. They’re right, you know. Given Grayscale was suggesting they had productive talks with the SEC prior to approval, and they had made extensive amendments to the rule proposal in line with those discussions, my guess is the Rule 431… https://t.co/kgpKanb9oY pic.twitter.com/v4imdg4XvZ

— Scott Johnsson (@SGJohnsson) July 11, 2025