On Tuesday, the United States Securities and Exchange Commission (SEC) gave the green light for the transformation of Grayscale‘s Digital Large‑Cap Fund into a registered ETF. This fund includes the five largest cryptocurrencies: Bitcoin, Ether, Solana, XRP and Cardano.

What exactly is in the fund?

Bitcoin (BTC): approximately 80.2% of the portfolio

Ether (ETH): around 11.3%

Solana (SOL): about 2.7%

XRP: over 4.8%

Cardano (ADA): approximately 0.8%

This diversified fund tracks the CoinDesk Large Cap Select Index and combines exposure to leading digital assets with the benefits of an ETF structure.

Why is this such a milestone?

Grayscale was known for its trust-based structures, which often led to significant differences between market price and net asset value (NAV). This was partly due to investors being temporarily locked in and the lack of in-kind redemptions—where shares could be exchanged for underlying assets—creating room for arbitrage.

Now, with the transition to an official ETF, these arbitrage opportunities are nearly eliminated. The new objective is simple: the price of ETF shares should closely track the value of the underlying crypto assets, minus fees and expenses.

A long road with the SEC

Grayscale‘s journey to ETF status was far from easy. Since June 2022, the firm has been engaged in legal proceedings against the SEC following the rejection of its initial Bitcoin ETF application. Eventually, in August 2023, a judge ruled in favour of Grayscale, stating that the SEC had acted "arbitrarily and capriciously". That ruling broke the deadlock: in January 2024, Grayscale‘s Bitcoin Trust was approved as a spot Bitcoin ETF. Now, its broader Digital Large‑Cap Fund is following suit.

What does this mean for investors and the market?

Greater confidence in crypto ETFs: this move reinforces the perception that crypto is maturing as an asset class and becoming part of mainstream investment frameworks.

Less volatility between market price and NAV: the ETF structure helps reduce large price discrepancies between the actual value of the coins and the share price of the ETF.

Broader range of crypto ETFs on the horizon: Grayscale is preparing ETFs for altcoins such as SOL, XRP and ADA, supported by its earlier S-3 filing in April.

Summary

The SEC‘s approval of the conversion of the Digital Large‑Cap Fund into an ETF marks a major step in Grayscale‘s evolution and a signal that the crypto market is moving closer to traditional investment products. For investors, this means fewer price disparities and easier access to a balanced crypto ETF within their existing brokerage or pension platforms. It‘s a clear sign that crypto is becoming increasingly embedded in the regulated financial landscape.


Disclaimer: This is not financial advice. Always do your own research and consult a financial professional.