The SEC placed a stay on Grayscale’s ETF despite prior approval, blocking its NYSE listing.
Grayscale’s fund includes Bitcoin, Ethereum, Solana, XRP, and Cardano, expanding exposure options.
A new ETF listing framework is underway to streamline future crypto fund approvals and shorten review timelines.
Grayscale’s plan to convert its Digital Large Cap Fund into a spot crypto ETF has been halted by the U.S. Securities and Exchange Commission. The SEC issued a stay order just a day after approving the conversion and allowing NYSE to list shares of the ETF.
The SEC communicated the stay order through a formal letter addressed to the NYSE Group. The letter confirmed that the Commission is reviewing the delegated action and that the stay remains effective until further notice. This move prevents Grayscale from launching the ETF as planned.
Fund Includes Five Major Cryptocurrencies
Grayscale’s Digital Large Cap Fund includes Bitcoin, Ethereum, Solana, XRP, and Cardano. If launched, it would have marked the first spot ETF to offer exposure to XRP and ADA, both of which have faced regulatory scrutiny in the past.
Although the ETF conversion was approved under the SEC’s 19b-4 process by the Division of Trading and Markets, other divisions within the agency may not be aligned. Bloomberg analyst James Seyffart noted that another department might be examining the structure or timing of the fund’s market entry.
Framework for Crypto ETFs Still Developing
The SEC is reportedly working with exchanges to create a more consistent listing process for crypto ETFs. This upcoming framework is expected to reduce the standard approval time from 240 days to around 75 days.
The approval order may have been issued due to an impending deadline rather than full regulatory readiness. Seyffart indicated the Commission may have allowed the approval to avoid an outright denial while retaining control over the launch timeline.
As a result of the stay, the fund will not begin trading on the NYSE until the SEC lifts the order. No date has been given for when that might occur.
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