The SEC gave Grayscale’s $775 million Digital Large Cap Fund the green light on July 1, 2025, then promptly hit the pause button with a stay order. Talk about regulatory whiplash. The fund, packed with 80% Bitcoin and 11% Ethereum, was set to trade on NYSE Arca before getting stuck in bureaucratic limbo. Investors are left wondering what’s next as the SEC apparently needs more time to figure out its crypto ETF framework. The full story reveals even more twists.
Just when investors thought crypto ETFs were getting easier to steer, the SEC decided to hit the brakes on Grayscale’s Digital Large Cap Fund. The regulatory whiplash is real.
On July 1, 2025, the SEC’s Division of Trading and Markets gave Grayscale the green light to convert its $775 million fund into an ETF. Finally, some progress. The fund was packed with Bitcoin at nearly 80%, Ethereum at about 11%, and smaller chunks of Solana, Cardano, and XRP. It was set to trade on NYSE Arca under Rule 8.500-E.
Then came the plot twist. The SEC slammed on the brakes with a stay order under Rule 431(e), pausing the whole thing. Why? They suddenly needed to review the broader framework for crypto ETFs, especially multi-asset funds. Talk about timing.
Just when things looked promising, the SEC hit pause on crypto ETF approvals to reassess their entire regulatory approach.
The pause left investors hanging and the ETF’s trading timeline completely uncertain. One day you’re approved, the next you’re in regulatory limbo. Welcome to crypto. With Hester Peirce’s task force now leading crypto initiatives, the industry hopes for more consistent decision-making.
This drama reflects the SEC’s broader struggle with digital asset strategy. They’re trying to establish unified listing rules for crypto ETFs while exploring a more streamlined approval process. Instead of the lengthy 19b-4 application, they might allow faster S-1 filings. Revolutionary stuff.
The market isn’t thrilled. Investor uncertainty is through the roof, and the pause raises questions about crypto ETF viability. Meanwhile, other proposals for Solana, XRP, and Litecoin spot ETFs are waiting in the wings, with decisions expected by October. The approval odds? Pretty high, according to analysts.
Grayscale stayed quiet about the pause, which speaks volumes. Their fund was designed to offer diversified crypto exposure with Bitcoin as the anchor. The ETF conversion was supposed to reduce arbitrage opportunities and provide in-kind redemption. Now it’s stuck in regulatory purgatory.
Analysts view this as temporary drama tied to the SEC’s evolving stance on crypto investments. The regulatory framework shift could eventually open new investment avenues in the crypto space. But for now, Grayscale’s $775 million fund remains in suspended animation, waiting for the SEC to figure out what it wants.
The crypto ETF revolution continues, just with more bureaucratic speed bumps. A federal judge previously ruled in favor of Grayscale in August 2023, allowing ETF plans to proceed after the SEC’s initial denial. The SEC’s cautious approach regarding crypto asset regulation remains evident as they navigate this complex landscape.
