Grayscale has formally responded to the SEC’s surprise decision to stay its approval of the GDLC ETF conversion.
The asset manager argues that the agency has no legal right to pause the product beyond the deadline set by Congress. The firm insists that under U.S. securities law, the ETF is now automatically approved and ready to launch.
SEC Approved the GDLC ETF, Then Immediately Hit Pause
For context, on July 1, 2025, the SEC’s Division of Trading and Markets approved Grayscale’s bid to transform its Digital Large Cap Fund (GDLC) into a spot ETF. The product includes a mix of XRP, Ethereum, Bitcoin, Cardano, and Solana.
However, within hours, the SEC’s Office of the Secretary issued a stay under Rule 431(e), putting the approval on hold to allow full commission-level review. This surprise reversal has triggered frustration from Grayscale and sparked a legal response.
Grayscale’s Legal Argument
In its formal letter to the SEC, Grayscale’s legal team argues that the Commission ran out of time to take further action. They cite Section 19(b)(2)(D) of the Securities Exchange Act, which sets a 240-day deadline for the Commission to approve or disapprove rule changes submitted by exchanges.
According to Grayscale, that 240-day window ended on July 2. Notably, the original filing was back in October 2024. Since the SEC neither issued a final disapproval nor completed full Commission action, the ETF must now be considered “deemed approved” by law.
“The statute provides no authority to the Commission to extend [the deadline], by rule or otherwise,” the letter said. It stressed that internal rules like Rule 431 cannot override an act of Congress.
