The Securities and Exchange Commission (SEC) has recently approved the proposal to convert the Grayscale Digital Large Cap Fund into an exchange-traded fund (ETF), marking a significant milestone in the crypto investment space.
The newly approved ETF will issue trust units that track a basket of the five largest cryptocurrencies by market cap: Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). The portfolio weights at approval were approximately 80% Bitcoin, 11% Ethereum, 4.8% XRP, 2.8% Solana, and 0.8% Cardano.
Grayscale, the company behind the fund, reports non-GAAP assets under management of around $775 million for the product as of June 30. The fund, which has been trading on OTC Markets under the ticker GDLC since 2019, will now transition to NYSE Arca’s ETF roster. Once operational details are finalized, it will move to continuous trading and on-exchange creation and redemption.
The approval of the Grayscale ETF comes at a time of increasing optimism in the industry, with rumors circulating that the first spot Solana ETF could begin trading in the US as early as this week. Additionally, there are expectations of a wave of approval for other crypto ETFs throughout the summer.
The SEC’s approval of the Grayscale ETF highlights the exchange’s surveillance capabilities and the fund’s asset-quality thresholds, meeting the requirements to deter fraud and manipulation under Section 6(b)(5). This approval also paves the way for other crypto basket funds to potentially be converted into ETFs.
Other companies in the space are also looking to convert their crypto index products into ETFs. Bitwise filed a Form 19b-4 to uplist its $1.3 billion Bitwise 10 Crypto Index Fund (BITW) as an exchange-traded product. Hashdex has requested the SEC to broaden its Nasdaq Crypto Index US ETF to include seven additional altcoins, while Franklin Templeton has submitted paperwork to launch its own crypto index ETF.
In conclusion, the conversion of the Grayscale Digital Large Cap Fund into an ETF signals a significant development in the crypto investment space, with potential for more crypto ETFs to follow suit in the near future. This move further solidifies the integration of cryptocurrencies into traditional investment vehicles and demonstrates the growing acceptance of digital assets in the mainstream financial market.