Grayscale Investments has responded to the U.S. Securities and Exchange Commission’s (SEC) sudden decision to delay the launch of its Digital Large Cap Fund (GDLC) as an exchange-traded fund (ETF), describing the move as unexpected and indicative of a rapidly evolving regulatory climate. The announcement came in an email to Decrypt on Thursday, sparking broader conversations about the SEC’s shifting stance on crypto investment products, particularly those involving XRP. SEC Pauses GDLC ETF Launch Despite Early Approval The SEC initially fast-tracked Grayscale’s application to convert its GDLC product into a spot ETF. The fund, which primarily focuses on Bitcoin, also provides diversified exposure to Ethereum, Solana, XRP, and Cardano. While the regulator had previously moved swiftly in greenlighting the conversion process, it halted progress just before allowing the ETF to begin trading. Grayscale called the move surprising but framed it as part of a broader pattern. “While this development was not anticipated, it highlights the dynamic nature of the regulatory landscape for first-of-its-kind products like GDLC,” the company said. GDLC: A Diversified Crypto Investment Vehicle The GDLC fund is modeled on the CoinDesk 5 Index, which tracks the performance of the five largest and most liquid cryptocurrencies. According to the SEC filing, GDLC’s holdings include over 80% in Bitcoin, 11% in Ethereum, 4.8% in XRP, 2.8% in Solana, and 0.8% in Cardano. By offering investors a single product that spreads exposure across top-tier digital assets, GDLC aims to simplify access to the crypto market. The planned ETF listing was set to bring added liquidity and market efficiency compared to the original closed-end structure. Grayscale Vows to Push Forward Despite the regulatory holdup, Grayscale reaffirmed its commitment to listing GDLC as a full-fledged ETF. “We are actively working with key stakeholders to meet all requirements,” the firm said, promising to keep the public updated as new information becomes available. Grayscale has already successfully converted both its Bitcoin and Ethereum trusts into ETFs. These conversions helped solve pricing inefficiencies caused by their closed-end fund structures, which often led to significant discounts or premiums. SEC’s Evolving Approach to Crypto ETFs The SEC’s decision underscores its cautious yet shifting attitude toward crypto ETFs. While the agency now appears more receptive to funds centered on major assets like Bitcoin and Ethereum, it continues to withhold approval for ETFs that focus solely on mid-cap coins like XRP, Solana, or Cardano. We are on twitter, follow us to connect with us :- @TimesTabloid1 — TimesTabloid (@TimesTabloid1) July 15, 2023 Instead, the regulator has shown greater openness to diversified funds that include a mix of these altcoins, provided Bitcoin and Ethereum remain the dominant components. This nuanced approach suggests that while XRP isn’t off-limits, it still carries regulatory uncertainty when standing alone. Court Battle with the SEC Set the Stage Grayscale’s ongoing pursuit of ETF approval comes on the heels of a major legal victory against the SEC in 2023. After several rejections, Grayscale sued the agency, and a U.S. appellate court ruled in its favor, criticizing the SEC’s inconsistent reasoning when approving futures-based ETFs but denying spot products. That legal win was instrumental in forcing the SEC to revisit its position and ultimately approve spot Bitcoin ETFs, which have since attracted nearly $50 billion in inflows. Spot Ethereum ETFs followed suit, pulling in around $4 billion to date. What It Means for XRP and the Road Ahead Although XRP remains a small component of GDLC, the SEC’s refusal to greenlight the fund’s launch highlights the lingering regulatory headwinds surrounding the asset. The decision doesn’t amount to an outright rejection of XRP in ETFs, but it does reflect the SEC’s reluctance to move forward with products that heavily emphasize altcoins outside Bitcoin and Ethereum. For now, Grayscale remains undeterred. The firm sees GDLC as a milestone product—one that could shape the future of crypto exposure in traditional finance. As regulatory signals continue to shift, the industry will be watching closely to see whether XRP, and altcoins like it, will eventually gain equal footing in the ETF space. Disclaimer : This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses. Follow us on Twitter , Facebook , Telegram , and Google News The post Grayscale Reacts to SEC Action On XRP ETF appeared first on Times Tabloid .
