According to the SEC filing dated July 1, the new ETF will track a basket containing the top five cryptocurrencies by market capitalization. The portfolio allocation is as follows: 80% Bitcoin, 11% Ethereum, 4.8% XRP, 2.8% Solana, and 0.8% Cardano. 

The fund launched in 2018 and has traded on the OTC Markets under the ticker GDLC since 2019. With approval, it will list as an ETF on NYSE Arca and trade continuously. As of June 30, the fund manages roughly $775 million in assets and will now be publicly traded on major exchanges. 

ETF Conversion Marks a New Era for Crypto Investments 

Grayscale’s ETF conversion reflects a significant shift in the SEC’s view of crypto products. NYSE Arca amended Rule 8.500-E to allow limited liability companies to issue trust units and create index-based portfolios. 

Moreover, the SEC’s expedited approval may open similar conversion pathways for other crypto basket funds. For instance, Bitwise filed to convert its $1.3 billion Bitwise 10 Crypto Index Fund (BITW) into an ETF. Hashdex also plans to expand its Nasdaq Crypto Index US ETF with seven new altcoins. 

Following these developments, investors now anticipate the first U.S. spot Solana ETF to start trading this week. Franklin Templeton submitted its own crypto index ETF application in February. 

SEC’s New Approach Encourages Crypto Index Funds 

During the approval process, the SEC reviewed the exchange’s surveillance capabilities and the fund’s asset-quality thresholds. The Commission found these sufficient to prevent fraud and market manipulation. 

Notably, Grayscale’s approval marks the first multi-asset spot ETF product. Grayscale now opens a previously private investment product to general investors. This move follows Grayscale’s earlier conversion of GBTC to a spot ETF earlier in 2024. 

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Is the SEC Changing Its Stance on Crypto?

This move is seen as a potential shift in the SEC’s approach to cryptocurrencies. In 2020, the agency sued Ripple, alleging that the company issued XRP tokens as unregistered securities. However, in August 2023, a U.S. judge ruled that XRP is not inherently a security but could be considered one under certain conditions.

If the XRP ETF is listed as a commodity trust, it would be classified alongside existing spot Bitcoin (BTC) and Ethereum (ETH) ETFs, which were approved in 2023 and have driven significant interest in crypto investment products.

Trump’s Pro-Crypto Policies

21Shares submitted its Core XRP Trust ETF application in November 2024, just days after Donald Trump won the U.S. presidential election. Trump has pledged to make America the global hub for crypto and has appointed pro-crypto officials to key regulatory positions.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

On February 6, Cboe filed for four spot XRP ETFs, including 21Shares Core XRP Trust.

More Crypto ETFs Await Approval!

With the SEC’s acceptance of the XRP ETF application, expectations for additional crypto ETF approvals are rising. Applications have been filed for memecoin ETFs like Dogecoin (DOGE), Trump Coin (TRUMP), and Bonk (BONK), as well as altcoin ETFs for Solana (SOL) and Litecoin (LTC).

Existing Bitcoin and Ethereum ETFs are also looking to introduce staking and in-kind redemptions. On February 14, the Hashdex Nasdaq Crypto Index US ETF, the first spot crypto index fund in the U.S., began trading on Nasdaq.

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On November 15, Bitwise Asset Management announced that NYSE Arca had filed a 19b-4 form to list the Bitwise 10 Crypto Index Fund as an ETP. The fund includes investments in the top 10 cryptocurrencies, including Bitcoin, Ether, Solana, XRP, Cardano, Avalanche, Bitcoin Cash, Chainlink, Uniswap, and Polkadot. As of October 31, 2024, Bitcoin comprises 75.1% of the fund, Ether 16.5%, Solana 4.3%, and XRP 1.6%.

Bitwise CEO Hunter Horsley stated that ETPs are the “most efficient, practical, and useful tools” for providing exposure to crypto assets. ETPs are preferred for offering regulatory protections and increased shareholder efficiency. The ability of ETPs to continuously accept subscriptions and redemptions also allows for closer alignment with the fund’s Net Asset Value (NAV) in secondary market trading.

This filing marks another step in Bitwise‘s effort to convert its $1.3 billion trust into an ETP.

In addition to this filing, NYSE Arca also sought to list the Grayscale Crypto Index ETF. On October 29, it filed to list the Grayscale Digital Large Cap Fund as an ETF, which holds a portfolio of BTC, ETH, SOL, XRP, and AVAX.

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