XRP News Today: SEC Pauses Grayscale ETF Conversion Amid Regulatory Scrutiny

The U.S. Securities and Exchange Commission (SEC) has paused the conversion of Grayscale’s Digital Large Cap Fund into an exchange-traded fund (ETF). This decision comes after the SEC had previously approved the transactions involving the fund, which includes major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). The SEC invoked Rule 431 to place the decision under further review, effectively putting the ETF launch on hold. This rule allows any commissioner to suspend staff decisions for closer examination.

The fund, with roughly $755 million in assets, was set to be listed on the NYSE Arca. The SEC’s action reflects broader concerns about the risks and oversight required for ETFs that span across multiple blockchain projects. Unlike single-asset ETFs such as those tracking Bitcoin or Ethereum, the Grayscale Digital Large Cap Fund includes multiple crypto assets. This raises additional regulatory questions about custody and valuation of varied assets, market surveillance for altcoins like XRP, SOL, and ADA, and investor protection in a rapidly evolving market.

The decision doesn’t mean the ETF is dead—it’s a delay that signals deeper scrutiny. Grayscale’s fund, if approved, would have been the first to give investors broad exposure to top digital assets in a single, regulated product. Its delay may also stall other similar applications in the pipeline. This pause underlines how the SEC is taking a cautious approach to approving complex crypto financial products. It also reflects the agency’s desire to build a more robust regulatory framework before allowing such offerings into mainstream markets.

The SEC’s decision to pause Grayscale’s Digital Large Cap Fund conversion into an ETF represents a key moment in crypto regulation. While not a denial, it highlights growing regulatory sensitivity around multi-asset crypto funds. The final outcome will shape the direction of diversified crypto ETFs and influence how digital assets are integrated into traditional finance. The SEC is reportedly collaborating with exchanges to develop a streamlined standard for cryptocurrency ETF listings, aiming to reduce the 240-day timeline associated with the 19b-4 process to just 75 days. However, the agency may not yet be fully prepared for ETF rollouts, as different departments within the SEC may require additional review regarding structural aspects of the fund.