Grayscale Challenges SEC Over ETF Listing Delay
In a recent development, Grayscale Investments has taken issue with the United States Securities and Exchange Commission (SEC) for postponing the listing of its Digital Large Cap Fund (GDLC) on the New York Stock Exchange. This fund, which holds a diverse mix of cryptocurrencies such as Bitcoin, Ether, XRP, Solana, and Cardano, was set to be converted into an exchange-traded fund (ETF). However, the SEC’s Division of Trading & Markets has indefinitely delayed this conversion.
Grayscale’s Plan to Address SEC’s Decision
On July 8, Grayscale’s legal team articulated their concerns in a letter addressing the Office of the Secretary’s decision to delay the GDLC’s transition to an ETF. The SEC justified this delay by stating that it needed more time to review the delegated action pertaining to the listing.
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SEC’s Hesitation on Multi-Asset ETF
James Seyffart, an ETF analyst at Bloomberg Intelligence, speculated that the SEC might be holding back on multi-coin ETF launches until a comprehensive framework for digital asset exchange-traded products (ETPs) is established. He suggested, “The SEC may have specific concerns about the GDLC’s structure or other aspects, warranting further review before approval.”
Grayscale’s letter, however, indicates growing frustration with the SEC’s delay. The attorneys hinted at the possibility of filing a petition to temporarily lift the stay on the GDLC listing.
Potential Consequences and Next Steps
The letter from Grayscale outlined the implications of the SEC’s delay: “Under Section 19(b)(2)(D), the rule proposal is automatically approved if the statutory deadline is missed. The postponement is causing harm to Grayscale, the Exchange, and the Fund’s investors. We are considering a petition to lift the stay imposed by Rule 431(e) to allow the Fund’s public launch while the SEC reviews the delegated action.”
Grayscale concluded by acknowledging the SEC’s efforts toward regulatory clarity in the digital asset sector. “We appreciate the Commission’s strides in providing regulatory guidelines and are committed to cooperating with them to achieve common goals in the crypto industry,” the letter stated.
Expert Perspective: GDLC ETF Launch Imminent
Finance law expert Scott Johnsson weighed in on the situation between Grayscale and the SEC. Despite the complexities involved, Johnsson remains optimistic about the eventual launch of the GDLC as an ETF.
Anticipation for Approval
Johnsson commented, “Grayscale’s prior discussions with the SEC seemed productive, and they made necessary amendments to align with those talks. The Rule 431 application might be an isolated decision by a member of the SEC, but I believe the GDLC ETF will eventually be approved.”
While Bitcoin and Ethereum ETFs have already begun trading in 2024, the SEC continues to evaluate applications for ETFs involving other cryptocurrencies like Solana and XRP.
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