Grayscale Investments has filed to convert its $520 million digital large-cap fund into an ETF.
Posted October 16, 2024 at 12:53 AM ET.
Crypto asset management firm Grayscale Investments has filed with the U.S. Securities and Exchange Commission (SEC) to convert its multi-cryptocurrency fund into a spot cryptocurrency exchange-traded fund (ETF).
The New York Stock Exchange (NYSE) filed 19b-4. filing On October 14th, we officially launched a conversion request for Grayscale's Digital Large Cap Cap Fund (GDLC) on behalf of Grayscale.
The fund is heavily weighted towards the top two crypto assets by market capitalization, with Bitcoin accounting for 75% of the fund's total assets and Ether accounting for 19%. Allocations to Solana, XRP, and Avalanche are lower. As of this writing, GDLC had approximately $524 million in assets under management.
If approved, this will be Grayscale's first multi-crypto ETF, giving investors access to a basket of digital assets in a single investment vehicle.
There are several reasons why ETFs are generally easier to sell than closed-end funds. New shares can be created or redeemed based on demand, increasing liquidity. These funds also closely track net asset value (NAV), making it easier to trade at fair prices even in the absence of deep discounts or premiums.
This simple process of selling stock hasn't necessarily worked in Grayscale's favor. Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETF) both saw significant inflows following their conversion to ETFs.
To date, $20 billion has flown out of GBTC, and $3 billion has flown out of ETHE.
No ruling has yet been made on the SEC's stance on crypto assets other than Bitcoin and Ether. A series of lawsuits filed by regulators have labeled several crypto assets as securities, including XRP, Avalanche, and Solana.
Nate Geraci, president of The ETF Store, said the move could signal the issuer is leaning toward a change of government ahead of the U.S. election. Republican candidate and former president Donald Trump Gary Gensler SEC Chairman Fire “On the first day.”
“Basically, we're assuming that if Trump wins, administrators will become more crypto-friendly.” said X's Gerashi.
