The SEC has suspended the conversion of Grayscale's multi-asset private equity fund into a spot ETF, after announcing the need for a more in-depth review of the investment vehicle.
The U.S. Securities and Exchange Commission (SEC) has delivered an unexpected change to the crypto market. Just one day after approving the conversion of the fund Digital Large Cap Fund (GDLC) Grayscale's spot ETF, with exposure to Bitcoin, Ethereum, Solana, XRP and Cardano, the regulatory body decided to suspend its own verdict and announced an internal review that has investors and analysts on tenterhooks.
The move was unexpected by many, abruptly halting the launch of what is considered the first altcoin ETF in the United States, which had been hailed as a historic milestone for the crypto market.
TRADE ALTCOINS ON BIT2MEFrom celebration to doubt: the SEC's back and forth
The news that the SEC had approved the conversion of Grayscale's Digital Large Cap Fund (GDLC) into a crypto ETF was hailed as a historic achievement by the crypto industry. This financial product promised diversified access to five of the most important cryptocurrencies on the market: Bitcoin, Ethereum, Solana, XRP and Cardano. Its approval, which was carried out in an accelerated approval status and under a system of “delegated authority”, that is, without a direct vote by the commissioners, marked a significant step forward toward the integration of digital assets into traditional markets.
However, the euphoria was short-lived. The SEC, in a move as surprising as it was disconcerting, rescinded the approval and notified to the New York Stock Exchange (NYSE), which will review the decision.
Thus, the initial order has been suspended. "until the Commission decides otherwise", which means the conversion of the GDLC to an ETF is on indefinite hold. This setback has generated a wave of uncertainty, not only among investors but also among developers and promoters of innovative financial products.
Why did the SEC halt Grayscale's ETF?
The SEC has not revealed specific details about the reasons behind this internal review. However, analysts and experts comment that the decision appears to reflect the need for clearer and more robust regulation surrounding digital assets.
Grayscale's GDLC fund represents a key tool for those seeking diversified exposure to the market's leading cryptocurrencies. Converting it into a cash ETF would have facilitated access to these assets for institutional and retail investors, further cementing the legitimacy of cryptocurrencies in the mainstream financial world.
However, the SEC's suspension represents a new obstacle in the integration process between the crypto world and traditional markets, and highlights the internal tensions that persist within the US regulator.
Experts speak out on this decision
Eric Balchunas, senior ETF analyst at Bloomberg, said that the suspension announced by the SEC represents a temporary setback, but does not change the underlying trend. According to him, The SEC is under pressure to adapt to the new reality of digital assets and will sooner or later have to give the green light to diversified products.He commented that the SEC may be looking to “issue cryptocurrency ETP listing standards before any Act '33 spot ETFs with these other currencies come to market.”
Balchunas, along with his colleague James Seyffart, maintains that most of the crypto ETFs under consideration have a high probability of being approved, possibly this year, although he also acknowledges that this episode could delay the planned schedule and increase regulatory uncertainty.
In this regard, Seyffart pointed out that the deadline to approve or deny the conversion of Grayscale's GDLC fund was July 2, and that the SEC likely gave its approval not to reject the application, but for some reason, it is not yet ready to allow its launch and listing.
Like Balchunas, Seyffart believes the agency is first seeking the approval of a legal framework for digital assets. said that, despite this setback, the SEC will eventually approve altcoin ETFs, including the conversion of Grayscale's GDLC fund.
In conclusion, the future of altcoin ETFs, and cryptocurrency-based financial products in general, will largely depend on the ability of the SEC and other regulators to adapt to technological changes and respond to the demands of an increasingly dynamic and globalized market. The story is not yet written, but what is certain is that the outcome of this process will have a lasting impact on the evolution of the crypto industry and the way digital assets are integrated into the global financial system.
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