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The U.S. Securities and Exchange Commission (SEC) has confirmed that Grayscale has been allowed to transition its Digital Large Cap Fund (GDLC) into the spot exchange-traded fund (ETF). The green light allows the fund containing Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA) to trade as an authorized ETF product.
This step comes after a court decision in August 2023 that found the SEC’s earlier rejection of Grayscale’s Bitcoin trust conversion to be “arbitrary and capricious.” The legal win preceded this new approval. Grayscale’s earlier conversion of its Bitcoin trust into an ETF remains one of the highest-grossing crypto ETFs on the market.
According to CoinDesk Indices head of product Andy Baehr, Grayscale’s Digital Large Cap Fund is positioned to become the largest multi-token digital asset ETF globally. The product enables investors to access diversified exposure to several leading cryptocurrencies in a single regulated investment vehicle.
The fund has a 2.5% expense ratio and provides indirect exposure to the underlying digital assets without the technical difficulties of holding the tokens directly. By including multiple tokens in one ETF, the product also offers portfolio diversification within the crypto sector.
The SEC approval follows more general regulatory debates, and it is reported that the agency is going to simplify the process of launching an ETF. One possible amendment to the 19b-4 filing requirement would enable crypto ETFs to access the market more effectively, with approvals taking less time for fund managers and exchanges.
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Following the approval of GDLC, other asset managers are awaiting decisions on their pending ETF applications. Bitwise, another major crypto fund manager, has filed to convert its Bitwise 10 Crypto Index Fund (BITW) into a spot ETF. The fund holds 79% in Bitcoin, with the remainder spread across ETH, XRP, SOL, ADA, SUI, LINK, AVAX, LTC, and DOT.
Bloomberg analysts have pointed out the SEC's changing attitude and indicate that the probability of allowing single-asset crypto ETFs, especially those tracking Solana and XRP, has risen considerably. The predictions indicate a 95% likelihood of ETFs of these assets being issued on or before the end of 2025.
Having established that GDLC has been converted, the conversion is a landmark in the history of crypto investment products. It can act as a precedent or factor in future approvals and market adoption trends.
