- Grayscale is aiming to transform its Digital Large Cap (GDLC) fund into an ETF by submitting an S-3 form to the US SEC.
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In October 2024, NYSE Arca submitted a 19b-4 filing to list and trade GDLC.
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Crypto investors are preparing for significant market fluctuations in light of US President Donald Trump’s ‘Liberation Day’ tariffs.
Grayscale, a prominent digital asset manager behind the GBTC ETF, has filed an S-3 with the United States Securities and Exchange Commission (SEC) to facilitate a Digital Large Cap ETF. This application could enable Grayscale’s GDLC fund, which includes a diversified portfolio of Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA), to transition from a private fund to a public investment vehicle.
SEC’s final determination on GDLC 19b-4 expected in July
In October, NYSE Arca filed the 19b-4 with the SEC to list and trade the GDLC fund, proposing a rule change under NYSE Arca Rule 8.800-E to permit multi-asset index funds.
Bloomberg analyst James Seyffart is optimistic that Grayscale’s submission will coincide with the SEC’s deadline regarding the 19b-4 form in July, hinting at the possibility of index-based crypto ETFs by year’s end. The SEC began its 240-day review process on November 4, 2024.
The GDLC fund manages over $530 million in assets, covering major cryptocurrencies such as BTC, ETH, XRP, SOL, and ADA. If given the green light, the shift to an ETF listed on a traditional stock exchange would significantly enhance access for retail and institutional investors.
Exchange-traded funds have proven to be a vital source of liquidity for the crypto market, with data from SoSoValue indicating a total net inflow of $36 billion since their inception in January 2024.
Bitcoin’s response before ‘Liberation Day’
In the wake of the announcement, Bitcoin, the leading cryptocurrency, maintained a favorable outlook, registering a 2% increase in 24 hours to reach $84,584 according to CoinGecko data. Ethereum also exhibited slight growth, climbing 2.3% to trade at $1,876 during late Wednesday’s Asian session.
XRP, Solana, and Cardano showed minimal reaction to the news, indicating a cautious stance among investors ahead of Donald Trump’s ‘Liberation Day.’ The White House has indicated that extensive reciprocal tariffs may be imposed, affecting all trading partners.
Global markets are experiencing heightened anxiety, with consumer confidence hitting a 12-year low. The recent QCP report suggests that these tariffs could lead to further downturns, particularly in equity markets, which are currently seeing a weekly decline of 4-5%.
“Crypto volatility has remained resilient amidst the sell-off, drifting lower despite a similar downturn and Friday’s significant washout,” analysts at QCP noted. “Activity on our desk has leaned bullish as we approached the Asia open, with buyers pursuing upside exposure ($85k-$90k strikes) while selling downside risk ($75k-$80k strikes), possibly betting on a stronger start to Q2.”
Despite April historically being a robust month for crypto, investors are likely to remain cautious. Markets may require time to adjust and navigate numerous macroeconomic risks while awaiting guidance.