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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