XRP News Today: Grayscale Secures SEC Approval for Digital Large-Cap ETF Conversion

Grayscale, a prominent asset manager, has secured approval from the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF). This development signifies a major advancement in the institutionalization of crypto investing. The fund, which tracks the CoinDesk Five Index, includes the five largest cryptocurrencies by market capitalization: Bitcoin (BTC) with an 80.2% weighting, Ether (ETH) at 11.3%, XRP (XRP) at 4.8%, Solana (SOL) at 2.7%, and Cardano (ADA) at 0.81%.

The ETF structure will enable investors to gain exposure to these leading digital assets without the technical challenges of direct custody. This structure also offers the benefits of liquidity and transparency that ETFs are known for. The conversion of the fund into an ETF aligns the share value more closely with the underlying assets, narrowing the arbitrage opportunities that previously existed with Grayscale’s crypto trusts. In a letter accompanying the SEC’s approval, Grayscale stated that the investment objective of the Fund is for the value of the shares to reflect the value of the digital assets held by the Fund, less the Fund’s expenses and other liabilities.

This move underscores the maturation of the crypto investment landscape. Products once viewed as niche and risky are now transitioning to structures that align with traditional financial markets, increasing accessibility for a broader range of investors. The approval comes after a hard-fought legal battle with the SEC. In June 2022, Grayscale filed a petition to convert its Bitcoin trust into an ETF following a denial from the regulator. The dispute lasted over a year until a U.S. judge ruled in August 2023 that the SEC’s denial was “arbitrary and capricious,” granting Grayscale the right to proceed with the conversion. Today, Grayscale’s Bitcoin trust trades as an ETF with a 1.5% expense ratio, making it the most expensive Bitcoin ETF on the market while also standing as the highest-grossing Bitcoin investment product.

The approval of the Grayscale Digital Large Cap Fund (GDLC) into an ETF is a significant milestone for the crypto industry. This decision allows the fund, previously accessible only to accredited investors, to be listed on NYSE Arca and made available to the general public. The ETF will include a diverse portfolio of cryptocurrencies, with Bitcoin comprising nearly 80% of the assets, Ethereum making up approximately 11%, and smaller allocations to XRP, Solana, and Cardano. The approval of the GDLC ETF could also open the door to a diversification of crypto ETFs in the United States. Analysts have suggested that this decision could be followed by the approval of individual ETFs for XRP, Solana, and Cardano, among others. This shift in regulatory atmosphere plays a non-negligible role, as observers have noted a more favorable climate for the crypto industry within federal bodies. The SEC is currently examining a series of crypto ETF proposals specifically focusing on altcoins, and the approval of the GDLC could serve as a regulatory precedent, easing the transition to financial products focusing exclusively on these assets.