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 range of spot cryptocurrencies, as stated in a filing on October 29th. The Grayscale Digital Large Cap Fund, created in 2018 but not yet exchange-traded, currently includes Bitcoin (BTC), Ether (ETH), Solana (SOL), and other cryptocurrencies in its portfolio. Grayscale’s website reveals that the fund currently manages around $565 million in assets. The filing by NYSE Arca came just days after Grayscale submitted its own filing to convert the fund into an ETF on October 16th.
Grayscale faces competition from other proposed index funds, including those from asset managers Hashdex and Franklin Templeton. What sets Grayscale’s fund apart is its unique approach of tracking a basket of alternative cryptocurrencies, such as Avalanche (AVAX) and XRP (XRP), in addition to the more common Bitcoin and Ether. The fund follows the CoinDesk Large Cap Select Index and holds a total of five different crypto assets. On the other hand, the Hashdex and Franklin Templeton funds initially aim to hold only Bitcoin and Ether.
According to industry analysts, crypto index ETFs are the next major focus for issuers following the successful listing of ETFs holding Bitcoin and Ether in January and July respectively. Katalin Tischhauser, head of investment research at crypto bank Sygnum, believes that index ETFs are an efficient option for investors, similar to how the S&P 500 is purchased through an ETF.
Given the upcoming US presidential election, asset managers and exchanges are registering a multitude of proposed crypto products, which analysts are referring to as a “call option” on the election outcome. Eric Balchunas, a Bloomberg ETF analyst, suggested during the Plan B Forum conference in October that if former US president Donald Trump were to win, he would likely appoint a more libertarian chair for the Securities and Exchange Commission (SEC). Conversely, if Kamala Harris were to win, Balchunas believes that progress in this area could be delayed for a couple of years.
In July, the Cboe exchange requested regulatory approval 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 submitted a filing to register a spot Litecoin (LTC) ETF on October 15th.