Grayscale Seeks to Normalize Altcoins in Mainstream Finance

Grayscale has submitted regulatory filings with the U.S. Securities and Exchange Commission (SEC) for three new exchange-traded funds (ETFs) targeting Bitcoin Cash (BCH), Hedera (HBAR), and Litecoin (LTC), expanding its efforts to bring additional crypto assets into the mainstream financial markets. The filings include an S-1 form for the Hedera ETF and separate S-3 filings for the Litecoin and Bitcoin Cash ETFs. These applications are part of a broader strategy to convert existing Grayscale Trust structures into ETFs, a process previously undertaken with its Bitcoin and Ethereum offerings in 2024.

The proposed Bitcoin Cash ETF represents the first such filing in the U.S., signaling growing interest in altcoin-based investment products. The fund is designed to list on the NYSE Arca, provided the SEC adopts the proposed Generic Listing Standards, which are still pending approval. The Trust will be administered by the Bank of New York Mellon, with Coinbase serving as both the prime broker and custodian. Grayscale has also filed similar applications for its Litecoin ETF, with the same structure and listing intentions.

For the Hedera ETF, Grayscale submitted an S-1 registration, a formal filing that differs from the S-3 forms used for the BCH and LTC ETFs. This filing is associated with Nasdaq’s earlier 19b-4 application to facilitate the listing and trading of the fund. Grayscale has not previously maintained a closed-end fund for Hedera, which is why the filing process differs from that of Litecoin and Bitcoin Cash. The SEC has yet to approve the proposed rule changes for the Hedera ETF, with a final decision expected no later than November 12.

These filings are part of a larger trend of over 90 crypto ETF applications currently under review by the SEC, including products for Chainlink, Solana, Dogecoin, and XRP. The regulatory body has repeatedly delayed decisions on several applications, prompting speculation about its cautious approach to approving new crypto-related investment vehicles. Meanwhile, Grayscale’s prior success in converting its Bitcoin and Ethereum Trusts into ETFs in 2024 has demonstrated the potential for these products to gain traction among both institutional and retail investors.

The firm’s move underscores the increasing demand for diversified, regulated crypto investment products. Analysts have noted that Litecoin ETF applications, in particular, have some of the highest approval probabilities among altcoin filings, based on regulatory trends and market readiness. Grayscale’s strategic filings suggest a calculated approach to navigating the SEC’s evolving regulatory framework while positioning itself to capitalize on the anticipated market demand for crypto-based ETFs.