The US Securities and Exchange Commission has abruptly halted the conversion of Grayscale Investments’ Digital Large Cap Fund (GDLC), which contains XRP, Solana and Cardano besides BTC and ETH, into an exchange-traded fund, less than twenty-four hours after agency staff had granted the necessary rule change. In a one-page letter dated 1 July, Deputy Secretary J. Matthew DeLesDernier informed the New York Stock Exchange that, “pursuant to Rule 431 of the Commission’s Rules of Practice … the Commission will review the delegated action. In accordance with Rule 431(e), the July 1, 2025 order is stayed until the Commission orders otherwise.” Until that review is completed, GDLC cannot list on NYSE Arca.
The stay pauses an approval that the SEC’s Division of Trading & Markets had issued under delegated authority via Exchange Act Rule 19b-4, clearing NYSE Arca’s proposal (File No. SR-NYSEARCA-2024-87) to list GDLC as a “Trust Unit.” Without the Commission’s sign-off, the fund’s conversion cannot proceed even though its registration statement under the Securities Act is already effective.
Why Is The SEC Freezing The XRP And ADA ETF?
GDLC currently holds roughly $755 million, dominated by bitcoin (≈80 %) and ether (≈11 %), but it is the roughly eight percent allocated across XRP, Solana and Cardano that makes the product the first multi-asset spot ETF to bundle tokens the SEC has not (yet) conceded are commodities. By contrast, Grayscale’s bitcoin trust (GBTC) converted without incident in January 2024, after the D.C. Circuit ordered the SEC to vacate its earlier denial.
Bloomberg Intelligence ETF analyst James Seyffart broke the news on X: “UPDATE: While @Grayscale was given an approval order for their conversion of $GDLC into an ETF yesterday, there was a letter attached to that approval that is putting a Stay on their ability to actually convert at this time.”
Seyffart sketched two, still-unconfirmed explanations. First, the Commission may be withholding all multi-coin launches until it finishes a comprehensive digital-asset ETP framework. “The SEC doesn’t want to let anything to launch under the 19b-4 process until they officially approve or come up with some framework for digital assets in the ETF wrapper. […] I assume the SEC didn’t want to deny it but for whatever reason they aren’t ready for a launch just yet.”
Second, an internal division other than Trading & Markets may have unresolved concerns about GDLC’s structure or disclosures. “The 2nd theory is that there’s something the SEC wants to work on in relation to a specific aspect of $GDLC itself (like its structure?) The 19b-4 approval order comes from the division of Trading & Markets. Perhaps another division isn’t ready to let this convert just yet,” Seyffart wrote via X.
His colleague Eric Balchunas echoed that reading: “The plot thickens. Upper level of SEC telling GDLC it can’t launch until otherwise notified. … My guess: They want to issue the crypto ETP listing standards before any ’33-Act spot ETFs hit market with these other coins.”
Rule 431 allows any Commissioner to pull an action approved by staff for plenary Commission review. The rule is procedural; it neither guarantees reversal nor sets a deadline. Historically, reviews have ranged from a few weeks to several months. Until the Commission votes, the staff order remains in limbo. Therefore, Seyffart concludes: “TLDR: It can’t convert *YET* but it will. We just don’t know when and we don’t exactly know why the SEC issued this ‘Stay’ order.”
Notably, Grayscale can submit legal briefs urging the Commission to affirm the staff approval; outside commenters may also file. The Commission may uphold, modify or overturn the order. Even if the approval survives, NYSE Arca cannot list GDLC until the stay is lifted.
At press time, XRP traded at $2.27.
Featured image created with DALL.E, chart from TradingView.com
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