XRP News Today: Grayscale's Digital Large Cap Fund Approved for Spot Crypto ETF Conversion

Grayscale Investments has secured approval from the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large Cap Fund (GDLC) into a spot crypto exchange-traded fund (ETF). This decision represents a pivotal moment for the crypto industry, as it allows for the first index ETF holding a diverse range of crypto assets beyond just bitcoin and ether to commence trading in the United States. The GDLC, initially launched as a private placement in 2018 and publicly traded on OTC Markets the following year, currently manages approximately $775 million in assets. The fund's portfolio is predominantly allocated to bitcoin and ether, comprising 91% of its assets, with the remaining 9% distributed among other cryptocurrencies such as XRP, solana (SOL), and cardano (ADA).

The approval of GDLC's conversion to a spot crypto ETF signifies a regulatory triumph for issuers in the segment. Previously, spot crypto ETFs were restricted to holding only the two largest crypto assets, with US spot bitcoin and ether ETFs launching in January 2024 and July 2024, respectively. Products holding a combination of BTC and ETH, issued by Hashdex and Franklin Templeton, hit the market in February. The approval of GDLC's conversion indicates a shift in the regulatory landscape, potentially opening the door for more diverse crypto ETFs in the future.

The SEC's decision to approve the conversion of GDLC was anticipated by various industry observers and executives. David LaValle, the head of Grayscale ETF, had previously expressed optimism about the approval of a multi-token offering, noting positive conversations with the NYSE and SEC. Analysts had also predicted that the SEC would greenlight the conversions of GDLC and the Bitwise 10 Crypto Index Fund (BITW) to ETFs by the July 2 deadline. The Bitwise fund, which holds 10 crypto assets with a heavy combined weighting to BTC and ETH, is also awaiting regulatory approval for its conversion to an ETF.

While the initial regulatory nod for GDLC's conversion has been received, the SEC must still deem the product’s registration statement effective before it can uplist to an ETF. The regulator is also considering planned single-asset products that would hold various cryptocurrencies, including SOL, XRP, ADA, litecoin (LTC), dogecoin (DOGE), and polkadot (DOT). The SEC has until October to rule on a number of these proposed products. This development underscores the evolving regulatory environment for crypto assets and the potential for increased diversification in the crypto ETF market.