A lawyer representing Grayscale, a digital asset management firm, has expressed concerns about a delay from the U.S. Securities and Exchange Commission (SEC) regarding the approval of the Digital Large Cap Exchange Transaction Fund (ETF). In a letter sent on Tuesday, the attorney pointed out that while the ETF proposal had received initial approval from the SEC’s trading and market division, it was halted shortly thereafter by the SEC Secretary’s Office due to a pending lawsuit.
The attorney argued this delay breaches the “statutory approval or disapproval deadline” mandated by the SEC and contradicts established procedures. The letter stated:
“The consequences of failing to meet the statutory approval or disapproval deadline are significant. Under Article 19(b)(2)(d), the proposed rule is effectively approved. Delays in the fund’s publication are detrimental to Grayscale, the exchange, and current investors.”
This transition from crypto-based trusts—previously among the earliest instruments in crypto investing—to Grayscale’s ETFs signifies the evolution of the crypto market, shifting from a niche sector to a more recognized asset class accessible to traditional investors.
SEC looks to streamline ETF approval process
In a related note, stock exchanges, fund managers, and the SEC are working towards simplifying the ETF approval process for certain crypto investment vehicles. This streamlined approach aims to automate various application steps, potentially allowing some ETF issuers to bypass the 19B-4 filing altogether. Journalist Eleanor Terret mentioned this in a post on X.
SEC Chair Paul Atkins has reiterated the agency’s focus on regulatory reform, emphasizing the need to end restrictive regulations through enforcement, which aims to foster innovation in the U.S. market. He stated, “My overall goal is to ensure transparency on the regulatory front, providing a solid foundation for the development of new products.”
This simplification could pave the way for traditional investors to venture into crypto, unleashing a wave of new digital asset investment options, such as AltCoin ETFs and tokenized funds. If successful, this increased accessibility may lead to significant capital inflows into the crypto market, potentially driving asset prices higher.
