Crypto asset manager Grayscale has filed with the United States Securities and Exchange Commission to convert its $520 million fund, which tracks multiple cryptocurrencies, into an exchange-traded fund (ETF).
The New York Stock Exchange (NYSE), on Grayscale’s behalf, requested the conversion in an Oct. 14 19b-4 filing — a form that asks the SEC to alter rules to allow the listing of a new ETF.
Grayscale’s Digital Large Cap Fund manages just over $524 million in assets and is weighted with a 76% allocation to Bitcoin (BTC), followed by 18% to Ether (ETH), and the remainder is split between Solana (SOL), XRP (XRP), and Avalanche (AVAX).
In an accompanying 8-K form, Grayscale notified its investors that the fund reflects the rule and listing changes proposed by the NYSE. A conversion to a spot ETF allows investors to buy and sell shares in a fund more easily.
Grayscale has requested that its GLDC fund be converted to an ETF. Source: SEC
Grayscale’s latest filing follows two major conversions earlier this year. The SEC approved the company’s requests to convert its Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE) into ETFs.
The SEC had previously rejected all applications for spot crypto ETFs until an August court decision in favor of Grayscale saw the regulator change its tune.
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Spot ETFs hold the underlying assets on their books, as compared to trusts and other non-spot crypto funds that rely on futures contracts to track prices. These have added regulatory proceedings that made it more difficult for investors to buy and sell shares in the funds.
Following the conversion to ETFs, Grayscale investors began unloading their shares due to a drastic change in the discount to the funds’ net asset value.
Six months before GBTC was converted to an ETF, investors could buy shares in GBTC for a 44% discount compared to buying spot Bitcoin, per YCharts data. GBTC investors cashed out on this when the fund was converted and discrepancies in pricing became non-existent.
GBTC’s discount to NAV evened out rapidly following the fund's conversion. Source: YCharts
The firm’s Bitcoin fund has seen $21 billion in outflows since its January conversion, while the Ethereum ETF has marked $3 billion in outflows since its conversion in July.
On Oct. 10, Grayscale added 35 altcoins, including Dogecoin (DOGE), Worldcoin (WLD), and Jupiter (JUP), to a list of crypto assets it put “under consideration” for potential future investment products.
It’s also been launching a new crypto fund roughly once every month, unveiling an Aave investment fund on Oct. 3, an XRP Trust on Sept. 12, and an Avalanche fund on Aug. 22.
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