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 fund holds a mixed portfolio of tokens, including Bitcoin, Ethereum, Solana, Ripple, and Avalanche. The New York Stock Exchange (NYSE) has requested the conversion on behalf of Grayscale, and a rule change has been proposed to accommodate the listing of the new ETF. The fund derives its value from a basket of large-cap digital assets, with Bitcoin comprising 75.59% of the portfolio, followed by Ethereum at 17.83%, and smaller allocations to SOL, XRP, and AVAX.
Following the successful approval of spot Bitcoin and Ethereum ETFs by the SEC, there is anticipation around the approval of an XRP ETF. However, some experts are skeptical about the approval of an XRP ETF due to ongoing legal battles between Ripple Labs and the SEC. Unlike Bitcoin and Ethereum, which have a clear set of rules, Ripple faces more regulatory hurdles, making it less likely for the US regulator to approve ETFs tracking XRP anytime soon. Grayscale’s move to launch an ETF tracking multiple tokens demonstrates its aim to diversify offerings and cater to investor demands.
Grayscale has previously launched its Bitcoin Trust, Bitcoin Mini Trust, Ethereum Trust, and Ethereum Mini Trust. The asset manager’s fifth multi-token ETF illustrates its commitment to expanding its product offerings to attract a wide range of investors. Data from Bloomberg and JPMorgan show that Grayscale Bitcoin and Ethereum funds have seen significant outflows, with $20 billion and $3 billion drained from the funds, respectively. The lower-fee versions of the BTC and ETH trusts, designed for retail investors, have attracted inflows totaling over $700 million.
The filing for the conversion of Grayscale’s Digital Large Cap Fund into an ETF follows the trend of cryptocurrency companies seeking approval for ETFs in the US market. The SEC’s approval of Bitcoin and Ethereum ETFs has paved the way for other digital asset funds to explore similar opportunities. Although there is optimism around the potential approval of an XRP ETF, concerns remain due to regulatory uncertainties surrounding Ripple Labs’ legal battles. Grayscale’s move to diversify its offerings aligns with market demands and investor interests, aiming to provide a range of investment options in the digital asset space.
Grayscale’s decision to convert its Digital Large Cap Fund into an ETF reflects the evolving landscape of the cryptocurrency market and the growing interest in digital asset investment products. The move to offer a multi-token ETF indicates a strategic shift in catering to diverse investor preferences and expanding the reach of digital asset investment opportunities. With the SEC’s approval of Bitcoin and Ethereum ETFs setting a precedent, the approval of an XRP ETF remains uncertain due to ongoing regulatory challenges faced by Ripple Labs. Grayscale’s commitment to providing innovative investment products demonstrates its adaptability to market trends and investor demand in the dynamic cryptocurrency space.
