Grayscale Files With SEC to Convert Multi-Crypto Fund Into ETF

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Sujha Sundararajan

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Sujha Sundararajan

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Last updated:

October 16, 2024 03:51 EDT

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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 over-the-counter trading multi-crypto fund holds a mixed portfolio of tokens, including Bitcoin, Ethereum, Solana, Ripple and Avalanche.

Per an October 14, 19b-4 filing, the New York Stock Exchange (NYSE) has requested the conversion on behalf of Grayscale. The filing has proposed a rule change to accommodate the listing of the new ETF.

Grayscale’s Digital Large Cap Fund (GDLC) derives value from a basket of large-cap digital assets as security. The fund predominantly invests in Bitcoin, with 75.59%, followed by Ethereum, weighing 17.83%. The portfolio also includes smaller allocations to SOL, XRP, and AVAX.

The proposal follows the SEC’s successful approval of spot Bitcoin and Ethereum ETFs, which has led to anticipation of XRP ETF approval. However, skeptics have raised alarms that an XRP ETF would repeat the past letdowns.

Some experts have predicted that the US regulator is unlikely to approve ETFs tracking the price of XRP anytime soon. This is because of the ongoing Ripple Labs’ legal battle with the SEC.

Yuriy Brisov from a UK-based crypto law firm Digital & Analogue Partners told Cryptonews that unlike Bitcoin and Ethereum, which have a “clear set of rules”, Ripple has “more problems to deal with.”

Grayscale’s Potential Fifth ETH Launch

Grayscale has already launched its Bitcoin Trust (GBTC), Bitcoin Mini Trust (BTC), Ethereum Trust (ETHE) and Ethereum Mini Trust (ETH). The asset manager’s foray into the fifth multi-token ETF highlights its aim to diversify offerings to cater to investor demands.

Per data from Bloomberg and JPMorgan, Grayscale Bitcoin and Ethereum funds have seen investors drain $20 billion and $3 billion out of the funds, respectively.

The BTC and ETH trusts are the lower-fee versions designed to attract a wide range of retail investors. The mini funds have drawn over $700 million in inflows together.