The SEC suspends the conversion of Grayscale’s GDLC fund into an ETF

After an initial approval, the SEC has decided to suspend the conversion into an ETF of the fund Grayscale Digital Large Cap Fund LLC (GDLC)

The position of the SEC and the regulatory importance

The Securities and Exchange Commission (SEC) of the United States has officially announced the suspension of the order for the conversion of the Grayscale Digital Large Cap Fund LLC into an ETF. The announcement was formalized on July 2, 2025, through a letter addressed to the New York Stock Exchange by the deputy secretary of the Commission. The suspension follows the approval, which took place on July 1, 2025, of the trading of the ETF.

James Seyffart, analyst at Bloomberg Intelligence, explains on X that there could be two reasons behind the SEC’s choice:

It can be found here on the SEC website. We have a few theories as to why this happened.

1. The SEC doesn’t want to let anything to launch under the 19b-4 process until they officially approve or come up with some framework for digital assets in the ETF wrapper. pic.twitter.com/WegC5d2Tcj

— James Seyffart (@JSeyff) 2 luglio 2025

Regulation is the key word in this matter. According to Rule 431(e), the SEC holds the power to suspend and review decisions of this caliber, especially when the landscape of digital assets like Bitcoin and Ethereum requires further evaluation. Consequently, the suspension will remain until further notice from the Commission.

The initiative of Grayscale: the strategy on ETFs focused on Bitcoin

The initial proposal by Grayscale aimed to convert its fund into an ETF, following a path already partially paved with a previous product. In fact, the SEC had already approved the conversion of another closed-end fund by Grayscale into an ETF. This ETF, of particular significance, boasts a composition in which about 80% of the reserves are entrusted to Bitcoin, followed by about 11% in Ethereum. Other criptovalute like Solana, Cardano, and XRP represent residual percentages.

The diversified offering of Grayscale demonstrates the growing attention of investors towards new forms of financial assets. The structure of the ETF covers a wide spectrum of capitalization, while still maintaining Bitcoin as the dominant element. This choice reflects the maturity reached by Bitcoin as a reference asset in the global financial context.

The motivations behind the suspension by the SEC

The decision to suspend the conversion of the newly approved ETF underscores the SEC’s cautious approach towards cryptocurrencies. Although the initial approval had injected optimism into the digital asset sector, the subsequent review highlighted the complexity of regulatory assessments that still characterizes the world of cryptocurrency ETFs.

Transparency and oversight are key words in the SEC’s assessments. The Commission closely monitors the dynamics related to financial products that include cryptocurrencies, both to safeguard investors and to ensure the integrity of the markets. In this sense, the Grayscale case represents a crucial testing ground in the journey towards clear regulation for ETFs that include Bitcoin as an underlying asset.

Diversification of crypto ETFs: not only Bitcoin

The portfolio of products that the SEC is reviewing in 2025 is not limited to Grayscale or solely to ETFs based on Bitcoin. According to official information, the Commission is examining dozens of crypto ETF proposals, including those focused on SOL (Solana), XRP, and DOGE (Dogecoin). This wide range of requests indicates a clear trend of diversification in the offering of financial products based on cryptocurrencies.

• Solana (SOL): is gaining more and more attention thanks to its transaction speed and its DeFi applications.
• XRP: considered relevant for cross-border payments.
• DOGE: known for its popularity on social media and community involvement.

The presence of these assets alongside Bitcoin and Ethereum within ETFs represents a turning point in the composition of investment portfolios. However, the road to final approval is still fraught with regulatory obstacles.

The market implications and the reactions of the operators

The impact of the decisions made by the SEC is directly reflected in market expectations. The suspension of Grayscale’s conversion affected both institutional and retail investors, who were looking with interest at a greater integration of Bitcoin into products listed on traditional exchanges.

Furthermore, the continuous revision of the proposals provides essential elements for the future evaluation of the relationship between traditional finance and digital assets. Grayscale, with its portfolio largely centered on Bitcoin, remains one of the most observed companies in the sector.

Future Prospects: from Bitcoin to a New Regulated Finance

The current scenario suggests that Bitcoin will maintain a central role in defining the upcoming regulatory developments. The SEC, temporarily suspending the conversion of Grayscale Digital Large Cap Fund LLC, has chosen to reinforce prudence over the momentum of the markets. Meanwhile, the dialogue between institutions and operators will continue to define new standards for the crypto ETF industry.

Although there are no certainties about the timing of the review, each step adds fundamental pieces to the construction of a more transparent and secure financial ecosystem. Companies that, like Grayscale, focus on Bitcoin and the main cryptocurrencies for their ETFs, continue to redefine both the accessibility and the perception of investment in digital assets among an increasingly wide audience.

Bitcoin between regulatory evolution and financial innovation

The temporary halt imposed by the SEC on the conversion of the Grayscale fund into an ETF highlights how the sector is evolving, suspended between the need for innovation and the necessity for security. Bitcoin confirms itself as the focal point of the dialogue between regulators, financial operators, and investors. The caution of the SEC does not, however, dampen the global interest in Bitcoin ETFs and multi-crypto funds.

The impact of these decisions will be reflected in the investment strategies of the coming months and, in all likelihood, will redefine the relationship between traditional assets and cryptocurrencies. Monitoring developments and catching the signals from regulators remains today the first step to understanding the direction of the sector and anticipating its future dynamics.