Grayscale Seeks SEC Nod for Multi-Crypto ETF Conversion
The SEC will weigh a rule change request that would allow Grayscale to trade its Digital Large Cap Fund as an ETF.
Grayscale Investments is seeking regulatory approval to convert its Digital Large Cap Fund into an exchange-traded fund, according to a filing submitted to the Securities and Exchange Commission Monday.
NYSE Acra filed a Form 19b-4 for a rule change that would allow the Grayscale Digital Large Cap Fund to begin trading on the exchange.
"The Exchange...proposes to list and trade shares of the Grayscale Digital Large Cap Fund," the notice said.
The fund would be Grayscale's third conversion of a crypto-focused trust this year, following the introduction of the Grayscale Bitcoin Trust ETF (GBTC) in March and the Grayscale Ethereum Trust (ETHE) in July. The digital asset manager has also introduced mini-ETFs based on GBTC and ETHE, part of issuers' growing efforts to meet robust demand for cryptocurrency-focused products.
If approved, the fund would mark Grayscale’s first ETF offering investors exposure to a basket of large-cap digital assets in a familiar, regulated, exchange-traded product. Those assets include the two largest cryptocurrencies by market value, bitcoin and ether. The latter is the token of the Ethereum blockchain.
Bitcoin, Ether Holdings
The proposed ETF would track the CoinDesk Large Cap Select Index (DLCS), which currently includes Bitcoin (73.43%), Ethereum (19.94%), Solana (4.14%), XRP (1.97%) and Avalanche (0.52%). The fund currently has $531 million in assets under management, according to its fund page. Issuers have recently proposed single-crypto focused funds based on the spot price of XRP, solana and litecoin, three of the largest digital assets.
The SEC will post the rule change request in the Federal Register, the U.S. government's official daily publication that covers a range of notices, before scheduling a comments period.
The move could unlock over $167 million in value for existing shareholders, the filing said.
GBTC and ETHE have shed $20 billion and $3 billion in assets, according to U.K.-based asset manager Farside Investors, although as conversions with the highest expense ratios in their categories, they differ from their competitors.
Read More: Bitcoin ETFs Attract $1.2B as Crypto Prices Surge
A multi-crypto ETF could address some investor concerns by offering a diversified approach to digital asset exposure, potentially mitigating some of the volatility associated with single-asset products, according to the filing.
Bitcoin was recently trading below $68,000, off about 1.5%. Ether, the second largest crypto by market value was down similarly to change hands at about $2,500.
