Grayscale seeks to convert its crypto fund into an ETF

Grayscale, a prominent crypto asset manager, has officially filed with the United States Securities and Exchange Commission (SEC) to convert its $520 million Digital Large Cap Fund into an exchange-traded fund (ETF). The New York Stock Exchange (NYSE) submitted the request on Grayscale’s behalf in a 14 October filing. This move aims to simplify the buying and selling of shares for investors by creating a spot ETF that holds the underlying assets rather than relying on futures contracts.

Currently managing over $524 million in assets, the fund is heavily weighted in Bitcoin, accounting for 76% of its portfolio, with Ether making up 18%. The conversion comes on the heels of the SEC’s changing stance on crypto ETFs, following a favourable court ruling for Grayscale earlier this year. Previously, the SEC had rejected all applications for spot crypto ETFs, but the new developments indicate a shift in regulatory approach.

Investors have been offloading shares following the ETF conversions of Grayscale’s Bitcoin Trust and Ethereum Trust, with notable outflows recorded. Since the conversion to ETFs, Grayscale’s Bitcoin fund has seen $21 billion in outflows, while its Ethereum ETF has recorded $3 billion. Meanwhile, Grayscale continues to expand its offerings, recently adding 35 altcoins to its consideration list for future investment products.