The Securities and Exchange Commission (SEC) has approved the proposal to convert the Grayscale Digital Large Cap Fund into an exchange-traded fund (ETF), completing the conversion of the crypto index product into an ETF structure. According to a July 1 filing, the ETF will issue trust units that track a basket of the five largest cryptocurrencies by market cap: Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA).
As detailed in the order, the portfolio weights at approval were approximately 80% Bitcoin, 11% Ethereum, 4.8% XRP, 2.8% Solana, and 0.8% Cardano. Grayscale reports non-GAAP assets under management of roughly $775 million for the product as of June 30. The fund, which first launched in 2018 and has been trading on OTC Markets under the ticker GDLC since 2019, will now join NYSE Arca’s ETF roster. Once operational details are finalized, it will transition to continuous trading and on-exchange creation and redemption. The accelerated order amends NYSE Arca Rule 8.500-E to permit Trust Units issued by limited-liability companies and to recognize index-based portfolios.
The approval comes amid optimism driven by rumors that the first spot Solana ETF could start trading in the US as early as this week and expectations of a wave of approval for other crypto ETFs this summer. The Commission stated that the exchange’s surveillance capabilities and the fund’s asset-quality thresholds meet the requirements of Section 6(b)(5) to deter fraud and manipulation. Furthermore, the move opens the door for other crypto basket funds to be converted into ETFs.
Bitwise filed a Form 19b-4 in November to uplist its $1.3 billion Bitwise 10 Crypto Index Fund (BITW) as an exchange-traded product. Hashdex has also requested that the SEC broaden its Nasdaq Crypto Index US ETF to include seven additional altcoins, a step it says will precede a complete conversion of its diversified trust. Franklin Templeton likewise submitted paperwork in February to launch its own crypto index ETF, positioning the firm to shift existing basket assets into an exchange-traded format once approved.
