SEC Greenlights Grayscale’s Digital Large-Cap Fund Conversion to ETF

Asset manager Grayscale has received approval from the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large-Cap Fund into an exchange-traded fund (ETF).

The approved fund will track the same five cryptocurrencies featured in the CoinDesk Five Index that constitute the existing Digital Large-Cap Fund, aiming to replicate their weighted market performance, subject to expenses.

According to the commission file, the fund composition is primarily driven by Bitcoin (approx. 80.2%), followed by Ethereum (approx. 11.3%), with the remaining allocations being Solana (approx. 2.7%), XRP (approx. 4.8%), and Cardano (approx. 0.81%).

SEC, Grayscale, ETF — *SEC approves Grayscale ETF conversion. Source: SEC File*

Grayscale investors previously relied on arbitrage opportunities stemming from premiums or discounts relative to the underlying assets’ net asset value (NAV). This conversion, part of a broader shift, significantly narrows these potential arbitrage spreads.

The conversion request:

“The investment objective of the Fund is for the value of the shares to reflect the value of the Fund Components (as defined below), as determined by reference to their respective Index Prices and weightings within the Fund, less the Fund’s expenses and other liabilities.” – Fund Prospectus

The approval marks another significant development following Grayscale’s successful conversion process for several other cryptocurrency funds. This solidifies the transition from private trusts to regulated ETF structures.

Related: Analysts raise chance of SOL, XRP and LTC ETF approval to 95%

Grayscale’s Victory in the SEC ETF Process
This approval continues Grayscale’s trend of succeeding where the SEC initially resisted its earlier applications.

Earlier this year (Note: Original text uses 2025 dates, context assumes similar timeframe from SEC approval to filing/update), following multiple attempts, Grayscale successfully petitioned a court questioning the SEC’s previous rejections and achieved its conversion objectives.

The path paved: