The SEC Approves Grayscale’s First Crypto Mutual Fund
The Securities and Exchange Commission (SEC) has given approval to Grayscale’s Digital Large Cap Fund (GDLC), marking the first mutual fund equivalent for the crypto world. Unlike earlier products that invested solely in bitcoin or ether, GDLC offers a diversified portfolio of cryptocurrencies, including XRP, Solana, and Cardano.
Following this specific approval, the SEC also approved rule changes proposed by three national securities exchanges to establish generic listing standards for exchange-traded products (ETPs) holding digital assets. Joel Hugentobler, a Cryptocurrency Analyst at Javelin Strategy & Research, explained: “The generic listing standards allow exchanges to list commodity-based ETPs and ETFs holding crypto without requiring individual agency reviews for each fund. This will significantly streamline the process, which previously took 240 days and will reduce barriers to accessing digital asset products in the U.S.” Hugentobler further noted that additional financial products based on these ETPs and ETFs, such as options, are likely to emerge.
A Slow Approval Process for Crypto Funds
The crypto fund industry started in January 2024 when the SEC approved 11 bitcoin-focused funds. A few months later, five ether-based funds received approval. Grayscale was part of these initial approvals.
Momentum stalled as the SEC lagged in approving other crypto funds. As of last month, nearly 100 different crypto funds remained pending for approval, many tied to lesser-known assets like Avalanche and Bonk. Grayscale still hopes to convert its Chainlink Trust into an ETF.
With GDLC being diversified across several cryptocurrencies including bitcoin and ether, it may offer investors more stability. Hugentobler stated that while this marks a significant milestone for the industry, “we’re pretty stretched this cycle. We won’t fully understand its success until after the bear market portion of the cycle and see how it rebounds in terms of volumes and flows.”
