- Grayscale files to convert your multi-crypto fund into spot ETF.
- Analysts warn of challenges with the inclusion of XRP, SOL and AVAX.
On October 14, crypto asset manager Grayscale filed an application with the US Securities and Exchange Commission (SEC) to convert its multi-crypto fund into an ETF.
Currently, the company’s Digital Large Cap shares (GDLC) the fund has $524 million in assets under management and is expanding Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Ripple (XRP)And Avalanche (AVAX).
BTC and ETH dominated more than 90% of the fund.
If approved, the fund will trade on the NYSE (New York Securities Exchange) according to the filing. In a separate depositthe wealth manager informed its investors of the proposed changes to the fund’s rules.
Source: SEC
Race for crypto index ETFs
Converting a fund to a cash ETF makes it much easier to buy and sell shares of the fund. Grayscale converted two funds linked to BTC (GBTC) and ETH (ETHE) into spot ETFs this year.
However, at the moment only BTC and ETH are considered commodities by the SEC. In fact, other issuers that have applied similar measures Crypto Index ETFslike Hashdex and Franklin Templeton, have only included BTC and ETH in their applications.
But Grayscale even included XRP, which had no regulatory clarity given its ongoing SEC filing.
According to Nate Geraci of ETF Store, the move could be a bet on a change of administration after the US elections in November. He declared,
“It seems like issuers are piling on the ‘change of administration’ bet… In fact, they are lining up in the event of a Trump victory assuming that the administrator would be much more favorable to the cryptography.”
For its part, Presto Research, a research company focused on cryptography, seen demand as a potential path to altcoin ETF approval.
“Its approval could potentially pave the way for future altcoin ETFs, such as SOL, XRP and AVAX, whose prospects for ETF eligibility remain unclear under the current SEC.”
But analysts at Prestor Research also noted that the path to the app could be “riddled with pitfalls”, citing Spot The challenges of SOL ETFs in August.
That said, Grayscale-converted ETFs have faced increased capital outflows, as seen in GBTC and ETHE. Since its conversion, GBTC has lost over $20 billion in total flows and nearly $3 billion in ETHE outflows.
It remains to be seen how demand will play out after the US elections and whether other altcoins with unclear regulatory status will be approved.
