Digital asset management firm Grayscale has gained approval from the U.S. Securities and Exchange Commission (SEC) to offer its large-cap crypto index fund, comprising the five largest cryptocurrencies by market capitalization, as an exchange-traded fund (ETF) on the New York Stock Exchange (NYSE).
The company is a pioneer in crypto investment vehicles that provide investors with regulated exposure to digital assets without the technical challenges of holding the token directly. Last year, it released the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) ETFs, which were converted from closed-end funds to exchange-traded products.
Grayscale’s GDLC Fund Tracking Top 5 Crypto Greenlit by the SEC to be Listed as an ETF on the NYSE
The Grayscale Digital Large Cap Fund (GDLC), which primarily focuses on Bitcoin and Ether, also holds Solana, XRP, and Cardano. It was launched in 2018 as a private placement product to a select group of pre-qualified investors and began trading publicly on OTC Markets the following year. The close-ended fund modeled on the CoinDesk 5 Index measures the price performance of the five largest and most liquid digital assets.
More than 80% of the weighted fund’s holdings are composed of Bitcoin (BTC), followed by Ether (ETH) at 11.3%, XRP with 4.8%, Solana (SOL) at 2.7%, and Cardano (ADA) accounting for 0.81% of its assets.
NYSE Arca filed its proposal to convert the GDLC into a full-fledged ETF with the SEC in November 2024. This was the application that was approved on July 1, a day before it was set to expire. The securities watchdog has to date only greenlit spot crypto ETFs for the more established Bitcoin and Ether, which were launched in January 2024 and July 2024, respectively.
In February, the regulator greenlit Franklin Templeton’s EZPZ ETF and Hashdex’s Nasdaq Crypto Index US ETF, which provided investors with dual exposure to BTC and ETH. Hashdex’s filing showed that it plans to add seven more cryptocurrencies to the fund: Chainlink (LINK), Avalanche (AVAX), Litecoin (LTC), Uniswap (UNI), XRP, SOL, and ADA.
The Grayscale Digital Large Cap Fund will trade on NYSE Arca under the ticker symbol GDLC. The investment vehicle holds roughly $775 million in assets under management (AUM). As closed-end offerings, GDLC will trade at a discount or premium relative to the net asset value (NAV) of its underlying crypto holdings. This is due to supply and demand imbalances that stem from the fund’s structure.
SEC’s approval to convert GDLC from a closed-end fund to a full-fledged ETF came as no surprise. In a May episode of Nate Geraci’s Crypto Prime podcast, Grayscale’s ETF head, David LaValle, said the company had “good conversations” with the agency on its multi-token offering, which would be the next crypto ETF to be launched on Wall Street.
Last month, Bloomberg ETF analysts James Seyffart and Eric Balchunas wrote in a note that they expect the regulator to give a go-ahead to convert Grayscale’s crypto index fund by the July 2 deadline, considering that Bitcoin and Ethereum account for 90% of its assets.
“Having only small allocations to alternative coins might help their conversion bids even if the SEC hasn’t individually approved each asset for an ETF,” the analysts explained.
The next dual-crypto offering under review is the Bitwise 10 Crypto Index Fund (BITW), a product tracking the price of the 10 largest cryptocurrencies by market cap. It has significant allocations in BTC (75.1%) and ETH (16.5%), and an AUM of $1.386 billion. The SEC’s decision deadline on the 19b-4 filing for BITW is July 31, but Seyffart believes the agency could “go early” on it.
SEC Signals Openness to Multi-Crypto ETFs, Issues New Guidelines to Streamline Crypto ETF Listing Process
The SEC signalled on Tuesday that it is open to ETFs offering multi-token exposure as long as they devote most of their assets to Bitcoin and Ethereum. The regulator’s approval also coincided with the issuance of new comprehensive guidelines for crypto ETF issuers, covering areas such as NAV calculations, service provider selection, and custody practices.
Issuers are urged to provide tailored disclosures, emphasizing scrutiny on asset selection, custody, conflicts of interest, and creation or redemption mechanics for the ETFs, particularly during volatile or illiquid market conditions.
The agency is also exploring a simplified listing structure for crypto ETFs that would automate most of the process. Under the proposed overhaul, issuers of spot and derivatives-based products could sidestep 19b-4 filings and instead submit the form S-1 with a 75-day deadline. If the SEC does not object to the proposal, the issuer would be free to list and trade the ETF.
While Grayscale has received an initial regulatory nod to convert its crypto index fund, the SEC will next deem whether the product’s registration statement is effective before it can be uplisted to an ETF. Nevertheless, the move to approve GDLC could signal a broader shift towards regulated multi-asset crypto offerings and a milestone that marks the maturation of the crypto industry.
The SEC is also weighing in on proposals for single-asset ETFs that would invest in XRP, ADA, LTC, Dogecoin (DOGE), Tron (TRX), Sui (SUI), and Polkadot (DOT), among others. Bloomberg analysts have given a 95% approval outlook for XRP, LTC, and SOL offerings that have a deadline until October.
At the time of writing, Bitcoin was changing hands at $106,805, down 0.04% over the past 24 hours, while Ethereum was trading at $2,433, off 0.70% in the same period. Solana sat at $149.22, a 1.30% decrease over the past day, XRP at $2.18, dropping 1.40%, and Cardano at $0.5548, down 1.35%.
