Grayscale Seeks SEC’s Approval for Multi-Crypto ETF Conversion

Grayscale has sought the US SEC’s approval to convert its $524 million multi-crypto fund into an ETF, easing investors’ access to a diversified crypto portfolio.

Grayscale Files for Multi-Crypto ETF Conversion

Crypto asset manager Grayscale has requested approval from the US Securities and Exchange Commission (SEC) to convert its $524 million Digital Large Cap Fund into an exchange-traded fund (ETF). The New York Stock Exchange (NYSE) submitted the request on Grayscale’s behalf, utilizing the 19b-4 form.

Grayscale’s Digital Large Cap Fund currently manages over $524 million and includes a diversified portfolio of top cryptocurrencies. The fund allocates 76% to Bitcoin and 18% to Ether, with smaller allocations to other popular cryptocurrencies such as Solana, XRP, and Avalanche.

Grayscale’s Push for Spot ETFs

Grayscale’s latest filing follows earlier conversions of its Bitcoin and Ethereum Trusts into ETFs. A conversion to a spot ETF allows for easier trading of the fund’s shares compared to traditional trusts or funds that rely on futures contracts.

Spot ETFs are backed by actual assets, making them more attractive to investors looking for straightforward exposure to cryptocurrencies like Bitcoin and Ethereum. Recall that before the conversion of Grayscale’s Bitcoin Trust (GBTC) earlier this year, investors could purchase shares at a discount of up to 44%.

However, this possibility vanished following the conversion. Grayscale’s Ethereum Trust (ETHE) also followed a similar pattern, with conversions smoothing out previous price discrepancies.

Moreover, these conversions were accompanied by significant outflows, with $21 billion leaving the Bitcoin fund and $3 billion exiting the Ethereum fund since their respective conversions in January and July.

Grayscale Expands Altcoin Portfolio

Notably, Grayscale’s approach is not limited to Bitcoin and Ethereum. The company has also expanded its list of crypto assets under consideration for future products, adding 35 altcoins, including Dogecoin, Worldcoin, and Jupiter.

This marks the company’s ongoing commitment to offering a broad range of crypto investment opportunities to meet investor demands. Grayscale has been actively launching new funds and has introduced new products over the past three months.

Recent launches include an Aave investment fund on October 3, an XRP Trust on September 12, and an Avalanche fund on August 22, further showcasing Grayscale’s dedication to innovation and market expansion.

Canary Capital Files for Spot Litecoin ETF

Meanwhile, Canary Capital, a prominent asset manager, has filed an S-1 registration form with US regulators for a spot Litecoin (LTC) exchange-traded fund (ETF). The documents, submitted on October 15, outline Canary’s intent to offer investors exposure to Litecoin by tracking the CoinDesk Litecoin Price Index (LTX), one of the cryptocurrency market’s most recognized price indices.

This filing is the latest in a string of proposed crypto ETFs from Canary Capital. A few days ago, the asset manager submitted a similar filing for a spot XRP ETF.

These filings come as the US presidential election draws closer, a key event that analysts believe could impact the future of cryptocurrency regulation. Nate Geraci, president of financial advisory firm The ETF Store, called these filings “a call option on the November election,” highlighting how political decisions could shape the crypto landscape in the short term.

The US Securities and Exchange Commission (SEC) will now review Canary’s proposal. While this is an essential step, the SEC must first approve a rule change that allows at least one national securities exchange to list the proposed Litecoin ETF.

Nevertheless, approval is far from certain, as the SEC has historically taken a cautious approach to cryptocurrency-related financial products.

US Elections: Crypto Regulation in the Spotlight

Many in the industry are hopeful for more lenient regulation if political leadership changes following the November elections. Vice President Kamala Harris, now a presidential candidate, has shown signs of a more positive stance on cryptocurrency than Biden.

According to a recent report from Galaxy Research, Harris has been quietly positioning herself as more open to emerging technologies, including blockchain. However, Harris’ approach remains less favorable than that of Donald Trump, a rival and former president, who has more openly supported cryptocurrency.