XRP News Today: Grayscale Sues SEC Over Delayed Crypto ETF Approval

Grayscale Investments has initiated legal action against the U.S. Securities and Exchange Commission (SEC) in response to the regulator's decision to halt the approval of its Grayscale Digital Large Cap Fund LLC (GDLC). The fund, which offers exposure to Bitcoin, Ethereum, XRP, Solana, and Cardano, was initially approved by the SEC’s Division of Trading and Markets on July 1. However, the SEC subsequently issued a stay on the approval, citing a pending internal review.

In a letter sent to the SEC, Grayscale's legal team argued that the fund's approval should be considered automatically approved due to the SEC missing its legal deadline to act on the proposal. The team contended that the SEC cannot use its internal processes to bypass the legal deadline and that indefinitely holding the approval violates the rules set by Congress. Grayscale emphasized that the delay is negatively impacting the GDLC, asserting that the fund is being unfairly affected by the SEC's procedural pause.

Grayscale and NYSE Arca are considering whether to formally petition the SEC to lift the stay and allow the fund to launch. They have urged the Commission to voluntarily recognize that the approval became legally final on July 2. The asset manager and the exchange are exploring legal avenues to challenge the SEC's decision, which they believe is arbitrary and capricious. Grayscale's legal team is seeking a court order to lift the stay and permit the conversion of the Digital Large Cap Fund to proceed.

The SEC's stay on the approval of Grayscale's multi-crypto ETF has significant implications for the cryptocurrency market. The approval of a spot ETF that includes major cryptocurrencies such as BTC, ETH, XRP, and ADA would have provided investors with a regulated and accessible way to gain exposure to the digital asset market. The stay, however, has created uncertainty and may delay the launch of similar products, potentially hindering the growth and development of the cryptocurrency industry.

The legal battle between Grayscale and the SEC underscores the ongoing regulatory challenges faced by the cryptocurrency market. The SEC's decision to halt the approval of Grayscale's multi-crypto ETF has raised concerns about the regulator's approach to digital assets and its willingness to embrace innovation in the financial sector. As the legal challenge unfolds, market participants will be closely monitoring the outcome, which could have far-reaching implications for the future of cryptocurrency ETFs and the broader digital asset market.