Grayscale Files With SEC To Convert $520M Crypto Fund Into ETF
Crypto asset manager Grayscale has submitted a proposal to the US Securities and Exchange Commission (SEC) to convert its $520 million Digital Large Cap Fund into an exchange-traded fund (ETF).
The filing , submitted on 14 October 2024 through the New York Stock Exchange (NYSE), seeks to modify existing SEC rules to facilitate the listing of this new ETF.
Grayscale’s Digital Large Cap Fund currently manages over $524 million in assets, with a significant 76% allocation to Bitcoin, followed by 18% to Ethereum. The remaining portion of the fund includes assets like Solana, XRP, and Avalanche, reflecting the diversified nature of the investment.
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Grayscale Informs Investors About The Change
In a related disclosure, Grayscale filed an 8-K form to inform investors about the proposed changes and their potential impact. The shift from a traditional fund to a spot ETF structure means the fund would directly hold the underlying cryptocurrencies.
The filing comes after the SEC granted approval for the transformation of the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) into ETFs, marking a shift in the SEC’s stance following a court decision in August favoring Grayscale.
After market today @Grayscale filed to convert their Large Cap Fund ( $GDLC ) into an ETF to be traded on @NYSE . pic.twitter.com/LiYxmO1ecG
— James Seyffart (@JSeyff) October 15, 2024
Previously, the SEC had rejected all applications for spot crypto ETFs, but the ruling has opened the door for the company’s broader ETF strategy.
Spot ETFs, unlike trusts, directly hold the underlying assets, offering a more transparent and straightforward investment vehicle. However, these conversions have not been without challenges.
Investors in Grayscale’s funds began liquidating their shares following these approvals due to price discrepancies. For instance, six months before GBTC’s conversion, shares were trading at a 44% discount compared to the spot Bitcoin price.
Once converted, these discrepancies vanished, prompting some investors to sell off their holdings. Since January, Grayscale’s Bitcoin fund has witnessed $21 billion in outflows, while its Ethereum ETF has seen $3 billion in withdrawals since its July transition.
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Grayscale Adds 35 Altcoins To Its Consideration List
Meanwhile, Grayscale continues to explore new opportunities. Just recently, the firm added 35 altcoins , including Dogecoin and Worldcoin, to its consideration list for future products.
Currently, Grayscale offers 30 different investment products. It includes 25 single and diversified cryptocurrency investment trusts, four exchange-traded funds (ETFs), and one dynamic income fund.
This latest expansion follows a series of new product launches. The launches include the introduction of an Aave investment fund on 3 October 2024, an XRP Trust on 12 September 2024 , and an Avalanche fund on 22 August 2024.
The crypto asset management firm continues to be one of the largest institutional holders of Bitcoin, with 222,300 BTC valued at $12.8 billion held in its Grayscale Bitcoin Trust ETF (GBTC).
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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