Breaking New Ground: Grayscale’s Digital Large Cap Fund Uplisted as ETF
In a significant move for the cryptocurrency market, the United States Securities and Exchange Commission (SEC) has given the go-ahead for Grayscale Investments’ Digital Large Cap Fund to be uplisted as a spot exchange-traded fund (ETF). This decision marks a pivotal moment in the digital asset landscape, as the fund, primarily composed of bitcoin, along with ether, XRP, Solana, and Cardano, is set to begin trading on NYSE Arca under the Investment Company Act of 1933. Transforming a private trust with a six-year history and approximately $755 million in assets into the largest multi-token digital asset ETF approved in the United States, Grayscale is set to redefine investment opportunities in the crypto space.
Future Prospects: XRP, Solana, and Cardano ETFs on the Horizon
The approval is seen as more than just a milestone for diversified crypto products. Market-structure expert Nate Geraci, head of the ETF Store and co-host of the ETF Prime podcast, emphasized the implications of this development. “XRP, SOL & ADA will now be accessible within a ’33 Act ETF framework,” he announced on social media platform X. Geraci also noted that the SEC has released updated guidelines concerning the disclosure and registration of crypto ETFs. He suggested that individual spot ETFs for cryptocurrencies like XRP, SOL, and ADA might be the next big move.
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Geraci’s enthusiasm is shared by many in the financial community, especially as the SEC’s decision comes after a prolonged legal battle over Grayscale’s attempt to convert its Bitcoin Trust. The legal tussle, which ended with the District of Columbia Circuit Court ruling that the SEC’s initial rejection was “arbitrary and capricious,” set the stage for the approval of spot-bitcoin ETPs in January 2024. The SEC’s recent decision represents a noticeable shift in policy, capturing the attention of policy analysts and cryptocurrency enthusiasts alike.
Single-Asset Products Gaining Traction
The momentum for single-asset cryptocurrency products is rapidly increasing. When questioned about the potential timing for spot ETFs for XRP, SOL, and ADA, Geraci suggested they could arrive sooner than expected, potentially by the fourth quarter of the year.
Further insights from Fox Business correspondent Eleanor Terrett hint that the SEC is considering a “generic listing standard” that would simplify the process for exchanges to list token-based ETFs. This proposal would eliminate the need for the traditional Rule 19b-4 filing, provided that the cryptocurrency meets specific criteria such as market capitalization, trading volume, and liquidity. This streamlined process would allow issuers to submit a straightforward S-1 prospectus and launch their products within 75 days, significantly reducing procedural bottlenecks.
Anticipating a New Era for Crypto ETFs
Bloomberg Intelligence senior ETF analyst Eric Balchunas predicts that this new regulatory framework could unleash a wave of ETF approvals. “This is the breakthrough we’ve anticipated, with a 95% approval likelihood for most top cryptocurrencies,” he stated, forecasting that the standards would be flexible enough to accommodate the majority of the top 50 digital currencies.
However, his colleague James Seyffart offered a word of caution, emphasizing that while regulatory approval is a crucial step, it does not automatically translate to market demand for these cryptocurrencies in an ETF format.
The timeline for the debut of single-asset altcoin ETFs will hinge on how swiftly exchanges, issuers, and the SEC can finalize the proposed standards and expedite S-1 filings. Recently, Bloomberg’s ETF specialists Balchunas and Seyffart updated their approval odds for XRP, Solana, and Cardano to 95%. As such, the conversation has shifted from “if” to “when” these products will launch, with expectations set for this year.
Market Watch: Current XRP Trends
At the time of writing, XRP is trading at $2.19, reflecting the ongoing interest and activity in the cryptocurrency market.
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