Grayscale Investments, the asset management giant pioneering numerous crypto-related investment products, is seeking regulatory approval to convert its Digital Large Cap Fund into an ETF, according to a new filing with the SEC.
The $520 million fund currently manages multiple cryptocurrencies, with Bitcoin accounting for 76%, Ethereum taking 18% and the remainder distributed among Solana, XRP, and Avalanche.
With the proposal, Grayscale seeks to expand its cryptocurrency offerings, providing investors with diverse accessible investment options. If approved, the ETF will offer a regulated investment vehicle that tracks the performance of the underlying assets.
Here Come The ETFs!
Over the past few months, Grayscale has actively launched new trust funds that invest in popular altcoins like XRP, NEAR, SUI, and TAO. The rollouts came after the company’s successful legal battle with the SEC, which enabled the Grayscale Bitcoin Trust (GBTC) to be converted into the spot Bitcoin ETF.
Despite massive redemptions at the beginning, GBTC is still holding the second-largest Bitcoin ETF, just behind BlackRock’s iShares Bitcoin Trust (IBIT). According to Farside Investors, GBTC just extended its inflow streak to two consecutive days, now holding over 220,000 BTC.
Following GBTC, in May, Grayscale, alongside other leading fund managers, launched spot Ethereum ETF. In addition, the company kicked off its Ethereum Mini Trust at launch. With numerous offerings available, Grayscale remains one of the most active and the leading asset managers when it comes to digital assets.
More Players in The Race
There’s growing interest from institutional investors who seek exposure to digital assets through regulated products. The trend toward offering products associated with other cryptocurrencies beyond Bitcoin and Ethereum has been recently embraced by a number of financial players.
The demand for cryptocurrency ETFs has surged as more investors look for ways to invest in digital assets without directly purchasing and managing them. The shift reflects not only demand for diverse products but also a broader acceptance of digital assets within the financial industry.
Recent 13F filings have shown that major financial institutions, such as BNY Mellon and BNP Paribas, are beginning to disclose holdings in various Bitcoin ETFs.
On Tuesday, Canary Capital, the fund manager focusing on cryptocurrencies, stepped up again into the ETF race with its spot Litecoin ETF filing. The move came shortly after the company made headlines with its push for an XRP ETF early this month.
Growing The Industry
Canary Capital said in its filing that the proposed product aims to provide investors with regulated exposure to Litecoin, similar to existing Bitcoin and Ethereum ETFs. The company is also the first to seek the SEC’s approval for a spot Litecoin ETF.
Other established entities, like VanEck and Bitwise, are also placing their bet on cryptocurrency ETFs. Both the companies filed to launch a Solana ETF just after the SEC approved their Ethereum ETFs.
Apart from its proposed Solana fund, Bitwise also made a bold move, filing with the SEC in pursuing an XRP ETF.
The introduction of those ETFs are expected to drive demand for cryptocurrencies as they provide a more accessible way for investors to gain exposure without directly purchasing digital assets. A successful launch could lead to increased market liquidity and onboard more investors to the cryptocurrency market.
However, all efforts to bring more cryptocurrencies closer to mainstream investors may not be granted anytime soon. The SEC’s stance on the industry and cryptocurrencies remain skeptic with less clarity and increasing enforcement.
The regulator still believes most cryptocurrencies are securities and subject to the federal securities laws.
Still, hopeful analysts see the upcoming US presidential election as an opportunity to turn the table. Whether Donald Trump or Kamala Harris takes the office, the elected candidate is expected to foster the industry growth, thus paving the way for more cryptocurrency ETFs to arrive.
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