Grayscale Seeks SEC Approval to Convert Multi-Crypto Fund into ETF

Digital assets manager Grayscale has filed with the US Securities and Exchange Commission (SEC) to convert its Digital Large Cap Fund into an exchange traded fund (ETF). The move follows the SEC’s successful approval of spot Bitcoin and Ethereum ETFs and aims to expand access to a diversified portfolio of digital assets.

NYSE and Grayscale Collaboration

The New York Stock Exchange (NYSE) has submitted a 19b 4 filing on behalf of Grayscale, requesting a rule change to list the new ETF. Grayscale’s Digital Large Cap Fund (GDLC) derives value from a basket of large-cap digital assets, predominantly investing in Bitcoin (75.59%) and Ethereum (17.83%), with smaller allocations to Solana, Ripple, and Avalanche.

Implications for the Market

The conversion of Grayscale’s multi-crypto fund into an ETF is seen as a significant step in broadening the accessibility and appeal of digital asset investments. The SEC’s previous approvals of spot Bitcoin and Ethereum ETFs have set the stage for this move, though skepticism remains regarding the approval of an XRP ETF due to ongoing legal challenges faced by Ripple Labs with the SEC.

Market Dynamics and Investor Behavior

Grayscale’s potential new ETF comes at a time when its existing Bitcoin and Ethereum trusts have seen significant investor outflows, with $20 billion and $3 billion drained from the funds, respectively. The new multi-token ETF underscores Grayscale’s strategy to diversify and attract a broader range of investors, leveraging the growing interest in cryptocurrency ETFs.

• Portfolio Composition:

  • Bitcoin: 75.59%

  • Ethereum: 17.83%

  • Solana, Ripple, Avalanche: Smaller allocations

Future Prospects and Industry Impact

The approval of this ETF could mark a pivotal moment in the digital asset investment landscape, potentially increasing institutional participation and investor confidence. Grayscale’s initiative reflects the broader trend of integrating digital assets into mainstream financial products, catering to the evolving demands of investors.