Grayscale Files to Convert Digital Large Cap Fund into ETF

Key Takeaways

• An official request was made on October 14 through a 19b-4 filing by the New York Stock Exchange on Grayscale’s behalf. 
•  Digital Large Cap Fund manages approximately $524 million in assets, with BTC making up 76% of the portfolio

Crypto asset manager Grayscale Investments has submitted a request to the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large Cap Fund into an exchange-traded fund (ETF), according to a report by The Wall Street Journal.

The fund currently holds a diversified portfolio of popular cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, and Avalanche (AVAX). As of the latest data, the Digital Large Cap Fund manages approximately $524 million in assets, with Bitcoin making up 76% of the portfolio and Ethereum accounting for 18%. Smaller allocations are dedicated to Solana, XRP, and AVAX.

Grayscale’s latest move follows its earlier successes in converting both its Bitcoin Trust (GBTC) and Ethereum Trust (ETHE) into spot ETFs earlier this year. These conversions came after the SEC’s previous opposition to spot crypto ETFs, a stance it was forced to reconsider after a court ruling in favour of Grayscale.

The official request for the conversion of the Digital Large Cap Fund was made on October 14 through a 19b-4 filing by the New York Stock Exchange (NYSE) on Grayscale’s behalf. This filing asks the SEC to modify its rules to allow the listing of the new ETF.

A successful conversion would allow investors to easily trade shares of the fund, providing more flexibility and liquidity. Grayscale states that the move would also align the fund with the proposed rule changes and bring greater transparency to its operations.

Grayscale’s earlier conversions have not been without challenges. Following the transformation of its Bitcoin and Ethereum trusts into ETFs, both funds saw significant outflows. The Bitcoin fund experienced $21 billion in outflows since its January conversion, while the Ethereum ETF recorded $3 billion in outflows since its conversion in July.

In addition to its ETF filings, Grayscale has been active in launching new crypto-focused investment products. In recent months, the firm added altcoins like Dogecoin, Worldcoin (WLD), and Jupiter to a list of assets it’s considering for future investment products. It also launched several new funds, including an Aave investment fund in October, an XRP Trust in September, and an Avalanche fund in August.

As the SEC continues to evaluate spot crypto ETFs, other companies like Bitwise and Canary Capital have also filed for permission to launch similar products, including a spot XRP ETF, which is still pending approval.