Grayscale claims that the ETF application for its cryptocurrency investment trust has been "automatically approved."

## Automatic approval claim expired on 240 date

On July 8, Grayscale Investments, a major U.S. cryptocurrency investment firm, submitted a letter strongly opposing the suspension of approval by the U.S. Securities and Exchange Commission (SEC) to turn cryptocurrency funds into ETFs. The company claims that the proposal was auto-approved due to the 240-day statutory expiration, pointing to the damage to investors.

On July 1, the SEC announced a committee-level review of the decision to approve the conversion of the Grayscale Digital Large Cap Fund into an ETF by the Trading and Markets Division. The listing on NYSE Arca is currently on hold until further action by the committee.

The legal advisor for Grayscale argues that under Section 19 of the Securities Exchange Act, which was enacted by the Dodd-Frank Act in 2010, the SEC is obligated to make a decision on approval or disapproval within 240 days of the proposal announcement. The company indicated that the proposal was automatically approved due to the expiration of the deadline on July 2.

The target fund is currently a basket-type cryptocurrency investment trust traded in the over-the-counter market for accredited investors. Approximately 80% of the portfolio consists of Bitcoin, 11% of Ethereum, and major tokens such as XRP, Solana, and Cardano are also included.

Grayscale stated in a letter that "due to the delay in the fund's public launch, Grayscale, exchanges, and existing investors are suffering damages," and expressed that it is considering submitting a petition to lift the suspension measures. The company argues that the suspension measures under Rule 431 cannot invalidate the 240-day deadline established by Congress.

The new leadership of the SEC is working on clarifying regulations for the cryptocurrency industry and has established a specialized task force aimed at formulating a comprehensive regulatory framework. Grayscale has expressed its intention to maintain a cooperative relationship with the committee in the future.