XRP News Today: Grayscale's GDLC Becomes First U.S. Spot ETF With Diverse Crypto Basket

Grayscale’s Digital Large Cap Fund (GDLC) has become the first U.S. exchange-traded fund (ETF) to hold a diverse basket of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Solana (SOL), and XRP. The U.S. Securities and Exchange Commission (SEC) has approved the conversion of GDLC into a spot ETF, marking a significant milestone in the cryptocurrency investment landscape. The fund, which previously traded over the counter, is now poised to offer investors a regulated and diversified exposure to multiple cryptocurrencies. This move is particularly noteworthy as it includes XRP, Solana, and Cardano, which have not been part of any U.S. spot ETFs until now. The fund's composition is predominantly Bitcoin at 80.8 percent and Ethereum at 11.1 percent, with the remaining 8.1 percent allocated to XRP, Solana, and Cardano.

The approval of GDLC's conversion into a spot ETF signifies a pivotal moment for the cryptocurrency market. The SEC's decision to approve the conversion of GDLC into a spot ETF is seen as a strategic move that aligns with the regulatory body's approach to gradually introduce new cryptocurrencies into the market. This incremental approach allows the SEC to monitor the performance and risks associated with these assets before making broader decisions. The approval of GDLC provides the SEC with valuable data on trading, flows, and creation-redemption activity, which can inform future regulatory decisions regarding standalone ETFs for XRP, SOL, and ADA.

The conversion of GDLC into a spot ETF is also indicative of the SEC's evolving stance on cryptocurrencies. The regulatory body has previously approved spot Bitcoin ETFs and spot Ether ETFs, demonstrating a willingness to engage with the cryptocurrency market. The approval of GDLC further solidifies this trend, as it includes a broader range of cryptocurrencies that have not been previously approved for spot ETFs.

The approval of GDLC's conversion into a spot ETF is expected to have a positive impact on the cryptocurrency market. It provides investors with a regulated and diversified exposure to multiple cryptocurrencies, which can help mitigate risks associated with individual assets. Additionally, the approval of GDLC is likely to pave the way for future approvals of standalone ETFs for XRP, SOL, and ADA, further expanding the range of investment options available to investors.

In addition to GDLC’s approval, discussions between the SEC and major exchanges are accelerating. Regulators are considering a new framework that may eliminate the 19b-4 rule-change hurdle. Currently, crypto ETFs must go through a two-step approval process involving both an S-1 and 19b-4 filing. This process often causes delays, uncertainty, and additional scrutiny. Under the proposed structure, ETF issuers could bypass the 19b-4 filing. Instead, they would submit an S-1 registration and wait 75 days. This streamlined path could reduce the launch time for compliant crypto ETFs. Exchanges would only list tokens that meet predefined asset-quality and surveillance standards.

This regulatory evolution may benefit several issuers. Bitwise, for instance, filed to uplist its $1.3 billion Bitwise 10 Crypto Index Fund. Similarly, Hashdex seeks to expand its Nasdaq Crypto Index US ETF by adding seven new altcoins. Franklin Templeton also aims to convert its diversified trust into an ETF structure. Moreover, the SEC’s decision clears the way for more crypto basket funds. The Commission noted that NYSE Arca’s surveillance tools and GDLC’s portfolio quality meet anti-fraud standards under Section 6(b)(5). This development signifies a turning point for crypto ETF policy. It could attract fresh institutional capital and deepen market liquidity.