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SEC Approves Grayscale’s Mixed Crypto Fund Conversion Into ETF

  • The SEC approved Grayscale’s Digital Large-Cap Fund conversion into a diversified crypto ETF.
  • The ETF includes BTC, ETH, SOL, XRP, and ADA, offering exposure to top crypto assets.
  • SEC issued new guidance to improve transparency and disclosures for crypto asset ETP issuers.

Grayscale has received SEC approval to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF). The move marks a milestone in the evolution of crypto investment products. The fund will now trade under the ETF structure on NYSE Arca.

Grayscale’s newly approved ETF includes Bitcoin, Ethereum, Solana, XRP, and Cardano. Bitcoin holds the largest share at 80.2%. Ether follows at 11.3%, while XRP holds 4.8%. Solana and Cardano have smaller weights at 2.7% and 0.81%, respectively.

The ETF reflects the CoinDesk Large Cap Select Index. It offers investors diversified exposure to the top five digital assets by market capitalization. Grayscale said the ETF aims to match the performance of these assets minus expenses and liabilities.

This change reduces the price inefficiencies that were common in Grayscale’s previous trust structure. Investors had long employed arbitrage strategies to capitalize on price gaps. These gaps stemmed from the lack of in-kind redemptions and lock-up periods.

With the ETF structure, pricing is expected to track the underlying crypto assets more closely. This change may improve market access and attract more investors. Grayscale has also converted its Bitcoin and Ethereum trusts into ETFs in recent months.

Grayscale’s approval follows a major legal battle with the SEC. In June 2022, the firm sued the SEC after the agency rejected its conversion request. The case centered on Grayscale’s Bitcoin Trust application. In August 2023, a U.S. court ruled in Grayscale’s favor.

The court called the SEC’s denial “arbitrary and capricious.” This ruling forced the regulator to reconsider its stance on crypto ETFs. Since then, the SEC has moved more swiftly on crypto investment products. The latest approval came just before the regulator’s decision deadline.

The SEC’s Division of Corporation Finance also issued a statement on July 1, 2025. It provided guidance on how issuers should handle disclosures for crypto asset ETPs. These products include both spot assets and derivative-based ETFs.

According to the SEC, crypto ETP issuers must register under the Securities Act and the Exchange Act. However, these products do not fall under the Investment Company Act of 1940. The SEC stressed that disclosures must be tailored to each fund’s structure and risks.

The statement noted several areas of focus for regulators. These include asset custody, valuation methods, trading volumes, and conflicts of interest. Issuers are encouraged to follow Regulation S-K and Regulation S-X in preparing their filings.

This is aimed at enhancing transparency, safeguarding investors, and creating orderly markets. SEC admitted that the disclosure requirements may differ depending on the issuer. Nevertheless, it emphasized the need for correct, complete, and current information on every filing.

Related: SEC to Eliminate 19b-4 Filing From Crypto ETF Approval Process

Broader Impact on Crypto and Financial Markets

The SEC’s approval of Grayscale’s mixed-asset ETF marks a key step toward broader acceptance of diversified crypto investments within a regulated framework. The decision could also shape the fate of upcoming ETF proposals.

Investors can now access the top cryptocurrencies through a single regulated product. This reduces barriers and can help facilitate mainstream adoption. Analysts believe that this would bring more retail and institutional investors to digital assets.

The ETF model also helps reduce the volatility associated with pricing discounts or premiums. It generates a more stringent monitoring of net asset values, making it efficient. The outcome is a more stable and accessible investment instrument for the digital markets.

With the Digital Large-Cap Fund now approved as an ETF, more diversified crypto products could follow. The crypto investment landscape is maturing. Grayscale’s move may shape how other asset managers approach digital asset offerings in the months ahead.

Disclaimer: The information provided by CryptoTale is for educational and informational purposes only and should not be considered financial advice. Always conduct your own research and consult with a professional before making any investment decisions. CryptoTale is not liable for any financial losses resulting from the use of the content.

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