NYSE Arca, a securities exchange, has submitted a request to United States regulators seeking approval to list a Grayscale exchange-traded fund (ETF) that holds a diverse assortment of spot cryptocurrencies, as stated in a filing on October 29. The Grayscale Digital Large Cap Fund, which was established in 2018 but has not yet been traded on an exchange, consists of a crypto index portfolio that includes Bitcoin (BTC), Ether (ETH), and Solana (SOL), among others. Currently, the fund has approximately $565 million in assets under management (AUM), according to Grayscale’s website.
Grayscale filed to convert the fund into an ETF on October 16, just a few days before NYSE’s filing. Other index funds proposed by asset managers Hashdex and Franklin Templeton present competition for Grayscale. Grayscale’s fund stands out among the proposed index ETFs as it tracks a basket of alternative cryptocurrencies, including Avalanche (AVAX) and XRP (XRP). The fund follows the CoinDesk Large Cap Select Index and holds a total of five different crypto assets. In contrast, the Hashdex and Franklin Templeton funds aim to initially focus solely on Bitcoin and Ether.
Industry analysts predict that crypto index ETFs will be the next significant focus for issuers after ETFs holding BTC and ETH were listed in January and July respectively. Katalin Tischhauser, head of investment research at crypto bank Sygnum, stated in August, “The next logical step is index ETFs because indices are efficient for investors – just like how people buy the S&P 500 in an ETF. This will be the same in crypto.”
Asset managers and exchanges are rushing to register a plethora of proposed crypto products, which analysts refer to as a “call option” on the outcome of the US presidential election. Eric Balchunas, a Bloomberg ETF analyst, remarked during the Plan B Forum conference in October, “If [former US president Donald] Trump wins… he will definitely appoint a more libertarian [Securities and Exchange Commission] chair. So if you see a Trump victory, watch this space, and if you see a [Kamala] Harris victory, just forget about it for a couple of years.”
In July, securities exchange Cboe requested regulatory permission to list VanEck’s and 21Shares’ planned SOL ETFs. In October, ETF issuers Canary Capital and Bitwise both filed for proposed XRP ETFs. Canary also registered a spot Litecoin (LTC) ETF on October 15.