TLDR
Grayscale urges SEC to lift ETF delay, claiming investor harm due to paused fund launch.
SEC’s delay on Grayscale’s ETF proposal could set precedent for crypto ETFs.
Grayscale may file petition to speed up SEC’s approval of its multi-crypto fund.
Grayscale’s legal push could influence future regulatory decisions on crypto ETFs.
Grayscale has escalated its efforts to move forward with its multi-crypto fund, urging the U.S. Securities and Exchange Commission (SEC) to lift a delay imposed on its proposed exchange-traded fund (ETF). The company claims that the ongoing delay is causing harm to its investors and has called on the SEC to adhere to statutory deadlines for approval.
In a letter sent to SEC officials, Grayscale emphasized that both the firm and its investors are suffering due to the pause in launching the fund.
Grayscale’s Request for Immediate Action
Last week, the SEC approved Grayscale’s proposal to convert its Digital Large Cap Fund into an ETF on an accelerated basis. This fund, which trades over the counter, primarily holds Bitcoin and Ethereum, with smaller allocations to Solana, Cardano, and XRP. However, despite the initial approval, the SEC later imposed a pause on the launch of the fund, stating that the decision was subject to further review.
In a letter to SEC officials, Grayscale’s legal team expressed frustration over the delay. “Grayscale, the Exchange, and the Fund’s current investors are suffering harm as a result of the delay in the public launch of the Fund,” the letter stated.
The firm has suggested that it may file a petition to request that the SEC lift the stay imposed on the fund. Grayscale’s lawyers are pushing for the SEC to promptly notify the Exchange that the proposal was deemed approved, citing Section 19(b)(2)(D) of the Exchange Act.
The SEC’s Pause on Grayscale’s Proposal
The SEC’s initial approval of Grayscale’s fund conversion was seen as a step toward integrating more cryptocurrency-based products into the mainstream financial market. However, the agency later paused the move, citing the need for further review by the full commission.
SEC Deputy Secretary J. Matthew DeLesDernier sent a letter to the New York Stock Exchange, confirming that while the Division of Trading and Markets had granted approval for the proposal, the final decision rested with the full SEC commission.
In response, Scott Johnsson, a general partner at Van Buren Capital, noted that Grayscale is now urging the SEC to act swiftly. Johnsson suggested that Grayscale’s legal team was leveraging statutory deadlines to push the commission into making a quicker decision. “They have to review and affirm/reject,” he said in a post on X. “Grayscale is telling them they don’t really have a choice here. The statute is pretty clear.”
Grayscale’s Legal and Regulatory Strategy
Grayscale’s ongoing push for a timely resolution has raised questions about how the SEC will proceed with its review. The firm’s legal team is now considering whether to pursue legal action, including the possibility of filing a petition to lift the stay. Grayscale’s request for expedited action aims to prevent any further harm to its investors, many of whom have been waiting for the fund’s official launch.
The SEC has been scrutinizing several crypto ETF proposals from various firms, including those tracking assets like XRP and Dogecoin.
Some analysts believe that the approval of Grayscale’s multi-crypto fund ETF could set a precedent for other crypto ETF applications. If Grayscale’s fund is approved, it could pave the way for future ETF launches in the crypto sector, offering more mainstream investment opportunities in digital assets.
Potential Market Shifts After SEC Decision
The SEC’s decision to approve or reject Grayscale’s proposal could have broader consequences for the cryptocurrency market. A green light for Grayscale’s multi-crypto fund could signal a more favorable regulatory environment for other digital asset firms seeking ETF approval.
As the SEC continues to review proposals, the outcome of Grayscale’s case could have lasting effects on how cryptocurrency products are integrated into traditional financial markets.
Grayscale’s legal team has made it clear that they will continue to pursue all avenues to resolve the delay, pushing for a swift launch of their fund. The outcome of this case could have significant ramifications not only for Grayscale but also for the future of cryptocurrency ETFs in the U.S.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
