Originally published on: October 16, 2024
Crypto asset manager Grayscale is making moves to convert its $520 million fund, which tracks multiple cryptocurrencies, into an exchange-traded fund (ETF). This conversion request to the United States Securities and Exchange Commission was made on behalf of Grayscale by the New York Stock Exchange in an Oct. 14 filing.
The Digital Large Cap Fund managed by Grayscale currently holds over $524 million in assets with a dominant allocation of 76% to Bitcoin (BTC), followed by 18% to Ether (ETH), and the remaining split between Solana (SOL), XRP (XRP), and Avalanche (AVAX).
Converting the fund to an ETF will enable investors to easily buy and sell shares. Grayscale recently converted its Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) into ETFs, following an August court decision that favored the company. This change in SEC regulation has paved the way for spot crypto ETFs to gain approval.
Unlike trusts and other non-spot crypto funds that rely on futures contracts, spot ETFs hold the underlying assets on their books. This conversion is expected to result in improved liquidity and pricing accuracy for investors.
The conversion of GBTC and ETHE into ETFs saw a significant decrease in the discount to net asset value, prompting investors to cash out. Grayscale has seen outflows of $21 billion from its Bitcoin fund since January and $3 billion from its Ethereum fund since July.
In addition to seeking approval for the conversion, Grayscale has expanded its range of crypto investment products by adding 35 altcoins, including Dogecoin (DOGE) and Jupiter (JUP), to its list of assets under consideration. The company has been actively launching new crypto funds, with recent additions such as the Aave investment fund, XRP Trust, and Avalanche fund.
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