The U.S. Securities and Exchange Commission (SEC) has approved the conversion of Grayscale's Digital Large Cap Fund (GDLC) into an exchange-traded fund (ETF). This marks a significant milestone in crypto investment accessibility, as it's the first multi-asset spot crypto ETF to receive SEC approval. The ETF will trade on NYSE Arca.
The Grayscale Digital Large Cap Fund, which was launched in 2018, includes a diversified basket of leading cryptocurrencies. As of June 30, Grayscale reported approximately $775 million in assets under management for the product. The ETF will issue trust units that track a basket of the five largest cryptocurrencies by market cap: Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). At the time of approval, the portfolio weights were approximately 80% Bitcoin, 11% Ethereum, 4.8% XRP, 2.8% Solana, and 0.8% Cardano.
The SEC's decision to approve Grayscale's application follows an amended S-3 filing submitted by Grayscale last week, signaling active dialogue between the company and the regulator. The approval is seen as a way to expand regulated crypto products for U.S. investors. The industry anticipates that this approval will further expand institutional investors' access to the virtual asset market.
This approval could pave the way for other crypto basket funds to be converted into ETFs. Bitwise has already filed a Form 19b-4 to uplist its $1.3 billion Bitwise 10 Crypto Index Fund (BITW) as an exchange-traded product. Hashdex has also requested that the SEC broaden its Nasdaq Crypto Index US ETF to include seven additional altcoins, which it says will precede a complete conversion of its diversified trust. Franklin Templeton has also submitted paperwork.
The SEC's approval of Grayscale's GDLC ETF represents a pivotal development in the U.S. crypto regulatory landscape. Unlike previous spot ETFs limited to Bitcoin or Ethereum, GDLC incorporates a diversified basket of leading cryptocurrencies, offering investors exposure to multiple high-profile tokens within a single fund. The inclusion of ADA, SOL, and XRP signals a strategic move toward deeper market integration and recognition of emerging blockchain ecosystems.
The SEC is also considering streamlining the ETF approval process, potentially removing the 19b-4 filing requirement to accelerate crypto fund launches. The proposed framework would allow issuers to bypass the 19b-4 filing, relying solely on the S-1 registration followed by a 75-day review period. This streamlined approach is designed to expedite the launch of new ETFs and is expected to enhance institutional participation and market liquidity by enabling diversified crypto ETFs beyond Bitcoin and Ethereum.
