Grayscale Challenges SEC Delay on Digital Large Cap Fund Approval

Grayscale Investments has appealed to the SEC to approve its Digital Large Cap Fund, a multi-crypto ETF product. The SEC previously issued a stay order pending internal review. Grayscale challenges the SEC's delay, citing harm to investors and potential market access changes. If approved, the fund could increase trading volumes and improve price discovery for its included assets. The outcome will likely affect how institutions access multi-crypto products in the near future.

Grayscale Investments has appealed to the U.S. Securities and Exchange Commission (SEC) to approve its Digital Large Cap Fund, a multi-crypto ETF product. The SEC previously issued a stay order pending internal review, which Grayscale challenges, citing harm to investors and potential market access changes. The appeal underscores the growing importance of multi-crypto ETFs in the crypto market.

In a letter sent to the SEC's Division of Trading and Markets director, secretary, and acting general counsel, Grayscale's lawyers urged the agency to adhere to rules enacted by Congress that create deadlines for approval for products like the Grayscale Digital Large Cap Fund LLC [2]. The lawyers highlighted the harm to investors and the potential market impact due to the delay in the fund's launch.

Grayscale's Digital Large Cap Fund is composed primarily of Bitcoin (almost 80%), Ethereum (about 11%), Solana, Cardano, and XRP, with single-digit percentages. The fund trades over the counter and represents a significant step in the maturation of the crypto industry from a niche market into a mainstream asset class available to traditional financial investors [1].

The SEC initially approved Grayscale's proposal to convert the fund into an ETF on an "accelerated basis," but a day later, the agency put a pause on it, citing a need for further review [2]. This pause has led Grayscale to consider filing a petition to lift the stay, allowing the fund to launch promptly while the review proceeds.

The outcome of this appeal will likely affect how institutions access multi-crypto products in the near future. If approved, the fund could increase trading volumes and improve price discovery for its included assets, potentially driving up asset prices and attracting more institutional investors to the crypto market.

References:
[1] https://cointelegraph.com/news/grayscale-sec-delay-digital-large-cap-fund-etf-listing?utm_campaign=rss_partner_inbound&utm_medium=rss&utm_source=rss_feed
[2] https://www.tradingview.com/news/the_block:3a1f03141094b:0-grayscale-presses-sec-to-allow-its-multi-crypto-fund-to-launch-citing-investor-harm/