Grayscale wins SEC approval to convert its Digital Large-Cap Fund into a crypto ETF, marking a major shift in digital asset investment.
Grayscale has received approval from the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF). This move is part of the company’s long-term strategy to bring more transparency and accessibility to crypto investing.
The fund tracks the CoinDesk Large Cap Select Index, which includes the top five cryptocurrencies by market capitalization. As of now, the fund is weighted heavily toward Bitcoin (BTC), which makes up 80.2% of the portfolio. Ether (ETH) comes in next at 11.3%. The remaining share includes XRP (4.8%), Solana (2.7%), and Cardano’s ADA (0.81%).
Grayscale’s transition from crypto trusts to ETFs helps reduce the pricing gaps investors used to exploit. These gaps, known as arbitrage opportunities, allowed traders to profit from the difference between the trust’s market price and the actual value of its assets. Those windows are now closing as Grayscale adopts the ETF model, which allows in-kind redemptions and tighter price alignment.
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According to Grayscale, the goal of the ETF is for its share price to reflect the value of the digital assets it holds, minus expenses and liabilities. This gives investors a clearer picture of the fund’s true worth, which wasn’t always the case with the old trust structure.
Grayscale has been a key player in the crypto investment space. Its crypto trusts were among the first tools that allowed institutional and retail investors to get exposure to digital assets without having to manage private keys or wallets.
But this shift to ETFs didn’t come easily.
In 2022, the SEC denied Grayscale’s attempt to convert its Bitcoin Trust into an ETF. The firm responded by filing a legal challenge. In August 2023, a U.S. judge ruled that the SEC acted unfairly and sided with Grayscale, marking a big win for the crypto sector.
That legal victory paved the way for Grayscale’s Bitcoin Trust to be listed as an ETF. Despite having the highest expense ratio among Bitcoin ETFs at 1.5%, it remains the top-earning Bitcoin investment product in the market.
The latest SEC approval for the large-cap fund continues Grayscale’s journey. It also signals how much the crypto investment space has matured. With more traditional structures like ETFs gaining traction, digital assets are slowly becoming part of mainstream portfolios.
