- The SEC is reportedly pausing new multi-asset crypto ETFs as it works on a broader framework for token-based ETPs.
- GDLC's ETF conversion promised liquidity, but the SEC paused it over investor protection concerns in crypto.
Though the SEC initially approved Grayscale's proposal to change its Digital Large Cap Fund (GDLC) into a spot crypto exchange-traded fund (ETF) on July 1, 2025, the SEC has suspended the plan temporarily.
A more cautious regulatory stance towards multi-asset crypto ETFs was signaled in this abrupt suspension, which followed on the heels of just one day after the SEC's Trading and Markets Division approved the listing of shares of GDLC onto the NYSE Arca platform.
The GDLC fund, which has assets worth approximately $755 million, holds a diversified portfolio of major cryptocurrencies such as Bitcoin, Ethereum, XRP, Solana, and Cardano.
The fund is predominantly composed of Bitcoin, which accounts for approximately 80% of the fund.
By replacing an in-kind formation and redemption mechanism with the existing closed-end fund mechanism, the ETF conversion would have enhanced liquidity and investor convenience.
"In accordance with Rule 431(e), the July 1, 2025 order is stayed until the Commission orders otherwise," the SEC said in the letter. "The Office of the Secretary will notify you of any pertinent action taken by the Commission."
Before allowing Grayscale's multi-asset fund to list, the SEC will probably be waiting for the launch of spot ETFs tracking particular altcoins such as Solana, Cardano, and XRP.
Although investor interest in regulated crypto investment products is rising, the SEC's move underlines the regulatory uncertainty still surrounding crypto ETFs.
While no timeline for revoking the stay exists, the temporary suspension reflects the SEC's conservative stance towards achieving a balance between investor protection and innovation in the fast-evolving digital asset space.
Edited by Annette George
