SEC Seeks Public Input on Grayscale’s XRP-Linked ETF
The United States Securities and Exchange Commission (SEC) has issued a formal request for public comments regarding its review of the Trading Division’s approval of Grayscale’s Digital Large Cap (GDLC) Fund. This fund, which includes XRP among its holdings, has the potential to become the first spot XRP exchange-traded fund (ETF) in the United States. XRP currently represents 5.99 percent of the fund’s total assets.
The SEC’s notice was published in the Federal Register and pertains to a proposed rule change that would allow the New York Stock Exchange (NYSE) to list and trade shares of the GDLC Fund. The Commission is inviting stakeholders to submit statements either supporting or opposing the approval order. These comments must be submitted by August 22, a deadline that could signal a decision shortly thereafter.
Although the Trading Division approved the GDLC Fund on July 1, the SEC issued a stay on the approval, indicating that the fund cannot proceed until further notice. In its latest update, the Commission confirmed that the stay remains in effect.
Grayscale has challenged the validity of this stay, arguing that the SEC lacks the authority to impose it under Section 19b of the Exchange Act. According to Grayscale and the NYSE, the Exchange Act takes precedence over the Commission’s Rules of Practice, rendering the stay order invalid. Section 19b stipulates that the SEC must approve or deny a proposed rule change within 240 days. Grayscale contends that since the SEC failed to act by the July 1 deadline, the fund should be considered automatically approved.
Bitwise Fund Also Under Review
In a separate notice, the SEC has also requested comments on the Bitwise 10 Crypto Index Fund (BITW), which includes XRP among its ten tracked assets. XRP comprises 5.9 percent of the fund’s holdings, alongside other major cryptocurrencies such as Bitcoin, Ethereum, Solana, Cardano, Sui, Chainlink, Avalanche, Litecoin, and Polkadot.
Similar to the Grayscale case, the SEC’s Trading Division had approved the NYSE’s proposed rule change to list and trade BITW shares. However, the Commission has also placed a stay on this approval pending further review.
Outlook for XRP ETFs
Bloomberg analyst James Seyffart noted that more clarity on the status of these funds is expected by the end of August. Meanwhile, fellow analyst Eric Balchunas has predicted that the SEC may approve other spot XRP-only funds by September or October. The upcoming August 22 deadline could be a pivotal moment for the future of XRP ETFs in the United States.
