In an order on Wednesday, the regulator permitted the listing and trading of Grayscale’s Digital Large Cap Fund (GDLC), following an indefinite pause in July. The SEC meanwhile approved of generic listing standards for commodity-based products, paving the way for other crypto ETFs.
A person familiar with the matter told Decrypt that GDLC is expected to begin trading on Friday.
Unlike spot Bitcoin and Ethereum ETFs that debuted in the U.S. last year, GDLC is modeled on an index tracking the five largest and most liquid digital assets. Bitcoin represents 72% of the fund’s weighting, while Ethereum makes up 17%, according to Grayscale’s website. XRP, Solana, and Cardano account for 5.6%, 4%, and 1% of the fund’s exposure, respectively.
“The Grayscale team is working expeditiously to bring the FIRST multi-crypto asset ETP to market,” CEO Peter Mintzberg said on X on Wednesday, thanking the SEC for its “unmatched efforts in bringing the regulatory clarity our industry deserves.”
Decrypt reached out to Grayscale for comment but did not immediately receive a response.
Meanwhile, Dogecoin and XRP ETFs from Rex Shares and Osprey funds began trading on Thursday. The funds are registered under the Investment Company Act of 1940, a distinct set of rules compared to the process most asset managers have sought approval for crypto-focused products under.
Not long ago, the SEC and Grayscale were at odds with each other. After the SEC rejected several applications looking to convert Grayscale’s flagship Bitcoin fund into a full-fledged ETF, the firm sued the regulator and emerged victorious in court during the Biden administration. The decision ultimately led to the approval of spot Bitcoin ETFs in the U.S.
“They fought for the industry,” ETF Institute co-founder Nate Geraci said on X on Wednesday. “They should also be applauded for laying groundwork here.”
Within the context of cryptocurrencies, Geraci said the SEC’s new rules for commodity-based products mirror the “crux of Grayscale’s lawsuit,” requiring that an asset have futures contracts trading on a venue in the U.S. that monitors for fraud and market manipulation.
Grayscale’s lawsuit argued that the SEC had approved of futures-based Bitcoin ETFs, while rejecting spot Bitcoin ETF proposals in an “arbitrary and capricious” fashion because of similarities between the products, including surveillance sharing agreements.
Coinbase’s derivatives arm offers futures contracts for 12 cryptocurrencies in the U.S. beyond Bitcoin and Ethereum, including XRP, Solana, and Dogecoin. This could serve as the basis for future ETF approvals, Bloomberg ETF Analyst Eric Balchunas said on X.
ETFs that track the price of several cryptocurrencies at once are a natural evolution and provide investors with more options, Kristin Smith, president of Solana Policy Institute, told Decrypt.
“The introduction of diversified crypto ETPs that hold multiple digital assets, including Solana, is the next logical step in the journey to ensure Americans can invest in crypto,” she said.
For former Grayscale employees, including Jennifer Rosenthal, currently chief communications officer at DeFi Education Fund, the SEC’s latest moves indicates how much the regulatory backdrop around crypto has changed over the past year-plus.
“It is crazy exciting how far we have come since the lawsuit and subsequent victory,” Rosenthal, who previously served as head of communications for Grayscale, told Decrypt. “For me, this has always been a conversation about investor choice.”
