Grayscale, a prominent crypto asset manager, has submitted a filing to the U.S. Securities and Exchange Commission (SEC) to convert its $520 million Digital Large Cap Fund, which tracks multiple cryptocurrencies, into an exchange-traded fund (ETF). The request, made through the New York Stock Exchange (NYSE) on Grayscale’s behalf in an Oct. 14 19b-4 filing, asks the SEC to amend its rules to allow the listing of this new ETF.
The Digital Large Cap Fund, which holds over $524 million in assets, allocates 76% of its holdings to Bitcoin (BTC), followed by 18% to Ether (ETH), with smaller portions in Solana (SOL), XRP, and Avalanche (AVAX). An accompanying 8-K form notified Grayscale investors about proposed rule changes and outlined the benefits of converting to a spot ETF, which would offer easier trading access for investors.
This move follows Grayscale’s earlier successful conversions of its Bitcoin Trust (GBTC) and Ethereum Trust (ETHE) into ETFs, marking a shift in the SEC’s stance on spot crypto ETFs after an August court ruling in Grayscale’s favor. Spot ETFs hold actual underlying assets, unlike other funds that rely on futures contracts, making them more accessible for investors.
However, following these conversions, Grayscale experienced significant outflows. Investors sold off shares as discounts to net asset values, which had been attractive in pre-conversion stages, disappeared. The Bitcoin ETF saw $21 billion in outflows since January, while the Ethereum ETF recorded $3 billion in outflows since its July conversion.
In addition to the proposed ETF conversion, Grayscale has been expanding its portfolio. On Oct. 10, it added 35 altcoins, including Dogecoin (DOGE) and Worldcoin (WLD), to its list of assets under consideration for future investment products. The firm has also been steadily launching new crypto funds, such as the Aave fund in October, an XRP Trust in September, and an Avalanche fund in August.
