SEC Reviews Grayscale’s Proposal to Convert GDLC Fund, Opening Doors for XRP ETF Approval

• Nate Geraci, President of the ETF Store via an X post has confirmed that the U.S. Securities and Exchange Commission is reviewing Grayscale’s proposal to convert its Digital Large Cap Fund (GDLC) into an exchange-traded fund.
• If approved, this would mark the first multi-asset spot crypto ETF in the U.S., paving the way for a spot XRP ETF which Canary Capital and Bitwise have filed.

The U.S. Securities and Exchange Commission is reviewing Grayscale’s proposal to convert its Digital Large Cap Fund into an ETF. This comes after the SEC confirmed that it had received NYSE Arca’s proposed rule change, seeking to list and trade Grayscale’s multi-coin fund shares which seeks to list and trade shares of Grayscale’s multi-token fund.

Notably, the application, filed under Section 19(b)(1) of the 1934 Securities Exchange Act and Rule 19b-4, allows self-regulatory organizations such as NYSE to propose rule changes. Notably, the SEC has announced that it is seeking public comment on Grayscale’s proposal to list and trade the Grayscale Digital Large Cap Fund (GDLC) as an ETF. The notice is for informational purposes only.

Nate Geraci via a post on the X platform confirmed the news with his more than 48k disciples asserting that the SEC’s acknowledgment marks the beginning of the official review process. If approved, Grayscale’s GDLC would become the first multi-asset spot crypto ETF in the United States, providing diverse exposure to a basket of leading cryptocurrencies.

SEC has formally acknowledged filing to convert Grayscale Digital Large Cap Fund (GDLC) into an ETF…

GDLC holds approx 77% btc, 17% eth, & remainder in sol, xrp, & avax.

SEC now soliciting public comments & decision clock starts ticking. pic.twitter.com/5zl6vHmyKo

— Nate Geraci (@NateGeraci) October 30, 2024

Reminiscing, the Grayscale Digital Large Cap Fund was introduced on February 1, 2018. This DLCF includes a blend of assets such as Bitcoin, Ethereum, Solana, XRP, and Avalanche. As of now, the fund’s total assets under management (AUM) are valued at approximately $558.84 million. Bitcoin and Ethereum make up the majority of the fund’s holdings, accounting for 76.26% and 17.20% of the AUM, respectively. 

Despite XRP holding a noble fraction of the GDLC, the SEC’s approval of the GDLC ETF could potentially unlock the doors for significant institutional interest in XRP. 

Looking at a regulatory point of view, this milestone would set a precedent for XRP in the U.S. financial landscape, where the regulatory climate around cryptocurrency investments remains uncertain.

Furthermore,  the approval could pave the way for a spot XRP ETF. As earlier reported, Bitwise and the most recent Canary Capitals have filed applications for an XRP-based ETF. These companies, aiming to launch ETFs specifically tied to XRP, submitted their applications earlier this month. However, the SEC has yet to acknowledge these filings, possibly due to the ongoing legal proceedings in the SEC vs. Ripple case.

Additionally, Ripple’s CEO has also been vocal about the potential approval of a Spot XRP ETF in the United States. Once again he doubled down on his confidence speaking at the 8th annual DC Fintech Week in a virtual interview with a leading news outlet.

Ripple Labs CEO Brad Garlinghouse says "it’s just inevitable” that the company’s XRP cryptocurrency will be offered through an exchange-traded fund https://t.co/o4ri9sleqY pic.twitter.com/AsiCLCBtVo

— Bloomberg Crypto (@crypto) October 23, 2024

In this interview, Brad Garlinghouse, calling the approval “inevitable” discussed the growing momentum behind XRP ETF and the likely impact on the crypto market especially and majorly on XRP, Ripples native token.