Asset manager Grayscale has received approval from the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF), marking another significant step in the institutionalization of crypto investing. The fund, which mirrors the CoinDesk Five Index, consists of the five largest cryptocurrencies by market capitalization. Bitcoin (BTC) dominates the fund with an 80.2% weighting, followed by 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 allow investors to gain exposure to these leading digital assets without the technical challenges of direct custody while benefiting from the liquidity and transparency that ETFs offer. End of an Era for Grayscale Trust Arbitrage For years, Grayscale’s crypto trusts provided investors with a unique arbitrage opportunity, allowing them to profit from premiums or discounts relative to the net asset value (NAV) due to the trust’s lock-up periods and lack of in-kind redemptions. However, these opportunities have narrowed as Grayscale transitions its private trusts into ETFs, aligning the share value more closely with the underlying assets. In a letter accompanying the SEC’s approval, Grayscale stated , “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, ‘Fund Components’ as determined by reference to their respective Index Prices and weightings within the Fund, less the Fund’s expenses and other liabilities.” The move underscores the maturation of the crypto investment landscape, as 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. Legal Battle Paved the Way Grayscale’s approval comes after a hard-fought legal battle with the SEC. In June 2022, the company 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 post Grayscale Secures SEC Approval to Convert Large-Cap Fund Into ETF appeared first on TheCoinrise.com .
