NYSE to List Grayscales Crypto ETF
NYSE Arca, one of the largest stock exchanges in the world, has applied to U.S. regulators to include a Grayscale exchange-traded fund that encompasses “exposure across the broader crypto market. NYSE to liist Grayscales Crypto ETF
If approved, this ETF — outlined in an Oct. 29 filing, would become the first of its kind with potentially systemic implications for the financial ecosystem (the ETF is presently $565 million AUM).
Grayscale’s Distinctive Approach: A Basket Of Crypto Holdings
Launched in 2018, The Grayscale Digital Large Cap Fund encompasses large segments of the crypto market.
In contrast to ETF services that only cover large assets such as Bitcoin or Ethereum, the fund provides a wide spectrum of digital currencies. The product tracks the CoinDesk Large Cap Select Index and holds Bitcoin, Ethereum, Solana, Avalanche and XRP.
This creates a more diversified strategy for investors to interact with, which is only going to become more interesting as the crypto landscape continues evolving.
On Oct. 16, Grayscale made a definitive move to convert that fund into an ETF. This was less than a week prior to the NYSE Arca filing with regulators in a clear effort to move this complex investment vehicle out into the hands of more investors.
The Battle for Supremacy in the Crypto Index ETF Space
Grayscale is not even the only game in town, either.
Others, such as Hashdex (via Nasdaq) and Franklin Templeton, have also filed for index funds but all they can offer so far are more “conservative” products that only invest solely in Bitcoin or Ethereum.
The unique aspect of that setup positions Grayscale to offer greater altcoin exposure than any ETF before.
According to Katalin Tischhauser, head of investment research at crypto bank Sygnum:
“Just like people buy the S&P 500 in an ETF, indices are made for investors.” It will be the same with crypto.”
The market is looking for efficient, diversified investment vehicles like traditional equity index ETFs.
Political Influence
The broader political environment also impacts the crypto ETF landscape. Insiders in the field have analyzed the frenzy to register these goods as a “call” on who will win the next presidential election.
For example, in the event of a Trump win, Bloomberg ETF analyst Eric Balchunas speculated that a chairperson for the Securities and Exchange Commission (SEC) would be more libertarian, potentially speeding up crypto ETF approvals. In contrast, a Harris presidency could slow progress on them.
Comments from Balchunas underscore the uncertainty facing regulators.
“Keep an eye on this space, because boom, if you see a Trump win,”
He said at the Plan B Forum back in October.
“And if you get a Harris win, then forget about it [for] two years.”
The direction that the ETF market takes will be determined largely by what happens in U.S. politics, which can either spur crypto investment products or shut down demand for them.
Next ETF Movement: All eyes on XRP & Solana
Demand for crypto ETFs has only increased since then, with this year bringing its fair share of headlines over several other filings.
Cboe filed with the SEC to list Solana ETFs from VanEck and 21Shares in July. Canary Capital and Bitwise filed shortly afterwards, all by October for the proposed XRP ETFs.
On Oct. 15, Canary applied for a spot Litecoin ETF as well, expanding the universe of crypto investment vehicles even more.
The frenetic pace demonstrates increased enthusiasm among asset managers and securities exchanges for the promise of crypto-based ETFs.
If granted approval, these offerings would give investors even more diversification and exposure to the fast-moving digital asset space.
At the moment Grayscale’s $565m AUM Digital Large Cap Fund is a light in the darkness of innovative products in this space. Next up: regulatory decisions around DTCC Ameribor — a critical defining moment for all other disparate crypto investment products. Only time will tell if the NYSE Arca filing gains momentum and gets approved, but the race for diversified crypto exposure to enter traditional finance has serious implications for investors and the overall market.
