NYSE Arca, a prominent securities exchange, has formally sought approval from U.S. regulators to launch a Grayscale exchange-traded fund (ETF) that would encompass a varied selection of spot cryptocurrencies, as indicated in a filing made on October 29.
The Grayscale Digital Large Cap Fund, established in 2018 but not yet available for trading on an exchange, manages a portfolio that features a crypto index incorporating major assets like Bitcoin (BTC), Ether (ETH), and Solana (SOL), among others. As per Grayscale’s website, the fund currently oversees approximately $565 million in assets under management (AUM).
On October 16, shortly before NYSE’s filing, Grayscale submitted a request to transform the fund into an ETF.
Grayscale faces competition from other proposed index funds, particularly those from asset managers Hashdex and Franklin Templeton. What sets Grayscale’s fund apart from the proposed index ETFs is its inclusion of alternative cryptocurrencies, such as Avalanche (AVAX) and XRP (XRP). The fund is designed to track the CoinDesk Large Cap Select Index and includes a total of five different crypto assets. In contrast, the funds from Hashdex and Franklin Templeton plan to focus solely on Bitcoin and Ether in their initial offerings.
Industry experts suggest that crypto index ETFs are becoming the next major target for issuers, following the introduction of BTC and ETH ETFs earlier this year in January and July, respectively. “The next logical progression is index ETFs, as they provide an efficient way for investors to gain exposure—much like purchasing the S&P 500 through an ETF. The same principle will apply to cryptocurrencies,” stated Katalin Tischhauser, head of investment research at crypto bank Sygnum, in an interview with Cointelegraph back in August.
Amidst this landscape, asset managers and exchanges are inundating regulators with applications for a multitude of proposed crypto products, a phenomenon that analysts are referring to as a “call option” on the potential outcomes of the upcoming U.S. presidential election.
“If [former U.S. President Donald] Trump secures a win, he is likely to appoint a more libertarian chair for the Securities and Exchange Commission,” noted Eric Balchunas, a Bloomberg ETF analyst, during the Plan B Forum conference in October. “So, if Trump emerges victorious, keep an eye on this space; conversely, if [Kamala] Harris wins, you might want to disregard it for a couple of years,” Balchunas added.
In July, the Cboe securities exchange also sought regulatory approval to list planned SOL ETFs from VanEck and 21Shares. Furthermore, in October, ETF issuers Canary Capital and Bitwise both filed proposals for XRP ETFs, with Canary also submitting an application to register a spot Litecoin (LTC) ETF on October 15.