US regulators mull approving Grayscale crypto index ETF

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As a seasoned crypto investor with years of experience navigating the volatile and ever-evolving digital asset landscape, I find the recent development regarding Grayscale’s Digital Large Cap Fund (GDLC) incredibly intriguing. Having seen the rise and fall of numerous altcoins, I can appreciate the strategic approach that GDLC takes by holding a diverse basket of cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Solana (SOL), Avalanche (AVAX), and XRP (XRP).

U.S. authorities are examining an application for a cryptocurrency-based exchange-traded fund (ETF), which would hold a variety of digital assets like popular altcoins. This announcement was made by asset manager Grayscale on November 4th.

On October 29th, NYSE Arca requested authorization from the Securities and Exchange Commission (SEC) to start trading shares of the Grayscale Digital Large Cap Fund (GDLC).

Grayscale stated that, if approved, the suggested adjustment to the rules would mark a historic moment as it would allow the first national securities exchange to list and trade shares of Exchange Traded Funds (ETFs) containing multiple cryptocurrencies.

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This investment fund maintains a collection of cryptocurrencies, specifically Bitcoin (BTC), Ether (ETH), Solana (SOL), Avalanche (AVAX) and XRP (XRP). It was established in the year 2018; however, it is not currently available for trading on mainstream stock exchanges.

GDLC holds approximately $534 million in assets under management (AUM) as of Nov. 4, according to Grayscale’s website.

US regulators mull approving Grayscale crypto index ETF

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Grayscale filed to convert the fund into an ETF on Oct. 16, only days before NYSE’s filing.

On Nov. 4, the NYSE’s requested rule change was published in the federal register, starting a 240-day clock for the SEC to decide whether to clear the ETF for trading.

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Grayscale faces competition from other proposed index funds — including those from asset managers Hashdex and Franklin Templeton — but GDLC is unique in including altcoins such as SOL, AVAX and XRP.

The Hashdex and Franklin Templeton funds aim to initially hold only BTC and ETH.

US regulators mull approving Grayscale crypto index ETF

Industry analysts say crypto index ETFs are the next big focus for issuers after ETFs holding BTC and ETH listed in January and July, respectively.

In a logical progression, index Exchange-Traded Funds (ETFs) are recommended for the crypto market, as indices offer efficiency to investors much like how people purchase the S&P 500 through an ETF. This is Katalin Tischhauser’s viewpoint, who serves as head of investment research at crypto bank Sygnum, expressed in her interview with CryptoMoon in August.

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From my perspective as an analyst, there’s been a surge in asset managers and exchanges submitting applications for potential altcoin ETFs, encompassing various portfolios that include Solana (SOL), Ripple (XRP), and Litecoin (LTC). This wave of filings is being referred to by analysts as a “call option” on the result of the upcoming US presidential election. In simpler terms, they see this move as a strategic bet on the future direction of the market or economy based on the election’s outcome.

David LaValle, Grayscale’s global head of ETFs, stated that Grayscale and NYSE Arca are carefully devising a potential set of rules for the SEC to allow trading and listing of shares from multi-crypto asset Exchange Traded Products (ETPs). This approach aims to align with the current regulations established by the SEC.

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2024-11-04 22:25