Grayscale Investments is moving forward with plans to convert its $524 million multi-cryptocurrency fund into an exchange-traded fund (ETF). The company recently filed a request with the U.S. Securities and Exchange Commission (SEC) through the New York Stock Exchange (NYSE), which submitted the official 19b-4 form on October 14 to facilitate the change.
The fund, known as the Grayscale Digital Large Cap Fund, holds a diverse portfolio of cryptocurrencies, with Bitcoin accounting for approximately 76% of its assets. If approved, the conversion would allow investors to trade shares of the fund more easily, giving them direct access to multiple digital assets via a spot ETF.
Why a Spot ETF Matters for Investors
Grayscale’s latest filing builds on its recent success in transforming other cryptocurrency products, including the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE), into ETFs earlier this year. These spot ETFs hold the actual underlying assets rather than relying on futures contracts, which simplifies trading for investors and offers more transparent pricing.
Before these conversions, the SEC had rejected multiple applications for spot crypto ETFs. However, a court ruling in August overturned one of these denials, prompting the regulatory agency to reconsider its stance and approve Grayscale’s requests.
The move to spot ETFs has significant implications. Before GBTC’s conversion, investors were able to purchase shares at a steep 44% discount to the underlying Bitcoin price. Once converted, these pricing discrepancies disappeared, leading many investors to cash out. Since its January transformation, the Bitcoin fund has seen $21 billion in outflows, while the Ethereum ETF reported $3 billion in outflows after its conversion in July.
Grayscale’s Future Crypto Expansion
Grayscale’s ambitions extend beyond Bitcoin and Ethereum. On October 10, the company expanded its list of potential investment products by adding 35 altcoins, including Dogecoin, for future consideration. Additionally, Grayscale has been introducing new funds nearly every month. Recent launches include an Aave fund on October 3, an XRP Trust on September 12, and an Avalanche fund on August 22.
