Grayscale has challenged the U.S. Security and Exchange Commission’s move to pause the debut of its exchange-traded fund that holds Bitcoin, Ethereum, Solana, XRP, and Cardano, alleging its investors are “suffering harm” as a result of the hold-up.
In a letter dated July 8, the asset manager urged the Securities Commission to allow its Digital Large Cap Fund to begin trading.
Grayscale added that it may file a petition to force the regulator to allow its fund to begin trading as soon as possible.
“The Exchange and the Fund’s current investors are suffering harm as a result of the delay in public launch of the Fund,” Grayscale’s lawyers said in the letter.
The Commissiongreenlighted the Grayscale Digital Large Cap Fund on July 1. But, the regulator placed a stay on the ETF later that week, citing its need to further review the product.
The Digital Large Cap Fund is largely composed of Bitcoin, which accounts for 80% of its underlying assets. Another 11% of its holdings are in Ethereum, while Solana, XRP and Cardano make up 2.8%, 4.8% and 0.8% of the fund, respectively, according to an SEC filing.
The fund is slated to be listed on NYSE Arca under the ticker GDLC.
In pausing the fund’s roll out, the Commission has seemingly circumvented a rule enacted by lawmakers to guarantee the timely approval or rejection of securities products, Grayscale argued in its letter.
“The Commission’s internal housekeeping rules cannot be used to skirt an act of Congress,” Grayscale’s lawyers wrote.
Grayscale’s back-and-forth with regulators underscores the hurdles asset managers face to debut digital asset-based investment products in the U.S., even as President Donald Trump’s administration ratchets back crypto industry regulations stateside.
Investment firms have flooded regulators’ desks with applications for ETFs tracking the prices of various cryptocurrencies, including meme coins such as Official Trump and Dogecoin and other altcoins like XRP, Solana and Aptos.
But while Bitcoin and Ethereum ETFs both won approval last year to begin trading in the U.S., applications for most other digital asset-based funds are still awaiting a regulatory green light.
