Approval could make Grayscale Digital Large Cap Fund the first U.S. ETF to hold altcoins like Solana and AVAX.
Introduction of New Grayscale ETF Possibility
U.S. regulators are evaluating Grayscale’s proposed crypto index ETF, which would hold a broad range of digital assets. The Grayscale Digital Large Cap Fund, if approved, would be the first ETF in the U.S. to include altcoins, such as Solana (SOL) and Avalanche (AVAX), along with other leading cryptocurrencies.
NYSE Arca’s Official Filing
On October 29, the New York Stock Exchange (NYSE) Arca submitted a request to the Securities and Exchange Commission (SEC) for permission to list Grayscale’s Digital Large Cap Fund (GDLC). This fund, which Grayscale hopes to convert into an ETF, could mark a major milestone in the crypto market.
Regulatory Hurdles Ahead
The proposed rule change, if approved, would establish the first framework on a national securities exchange for multi-crypto asset ETFs. Grayscale representatives commented, saying, “[T]he proposed rule change, if adopted, would represent the first national securities exchange ruleset permitting the listing and trading of shares of multi-crypto asset [ETFs].”
Asset Composition of Grayscale’s Fund
The GDLC includes a diversified selection of cryptocurrencies. It comprises Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Avalanche (AVAX), and XRP. Though the fund was originally launched in 2018, it is currently not available on public exchanges.
Current Valuation and Market Competition
According to Grayscale, the GDLC holds around $534 million in assets as of November 4. Competitors like Hashdex and Franklin Templeton have filed similar ETF applications but focus primarily on Bitcoin and Ethereum. The unique aspect of Grayscale’s proposal lies in its inclusion of altcoins such as Solana and AVAX.
Timeline for SEC Decision
On November 4, the SEC published NYSE’s requested rule change, triggering a 240-day review period for a final decision on Grayscale’s application. If successful, the approval could pave the way for new diversified crypto ETFs.
Analysts Predict Growth in Crypto Index ETFs
Analysts see index-based crypto ETFs as a natural progression after individual Bitcoin and Ethereum ETFs entered the market. According to Katalin Tischhauser of Sygnum, “The next logical step is index ETFs because indices are efficient for investors — just like how people buy the S&P 500 in an ETF.”
Grayscale’s Strategic Approach
David LaValle, Grayscale’s global head of ETFs, stated, “Grayscale and NYSE Arca have taken a thoughtful approach toward developing a proposed ruleset to permit the listing and trading of shares of multi-crypto asset ETPs within the SEC’s existing standard.”
Outlook for Investors
With the possibility of multi-crypto ETFs emerging, investors could gain diverse exposure within one ETF. Grayscale’s GDLC would allow investors to diversify their portfolios, marking an important step in the adoption of crypto assets in mainstream finance.
What Lies Ahead for Crypto ETFs
As the SEC reviews Grayscale’s proposal, investors eagerly await the agency’s decision, which could transform the U.S. crypto ETF landscape. Approval of the GDLC could also drive interest in future altcoin ETFs, providing an accessible gateway into the growing cryptocurrency market.
Disclaimer:
The information provided on 13Desk is for informational purposes only and should not be considered financial advice. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. Investing in cryptocurrencies carries risks, and you should only invest what you can afford to lose. 13Desk is not responsible for any financial losses incurred from your investment activities.
