Grayscale, one of the world's largest crypto asset managers, has taken a step that could open a new chapter in the crypto market. On September 8, the company filed an S-1 with the U.S. Securities and Exchange Commission (SEC) for an exchange-traded fund (ETF) focused on Chainlink (LINK). If approved, this product will provide investors with regulated and direct access to LINK. This development could pave the way for altcoin-based products beyond Bitcoin and Ethereum to reach Wall Street.
Expanding Beyond Bitcoin and Ethereum
Grayscale has long been known for its Bitcoin and Ethereum-focused funds. However, there has been a notable shift in the company's strategy recently. Having previously filed spot ETF applications for Avalanche, Dogecoin, Litecoin, Solana, and XRP, the company now aims to offer institutional investors a broader range of options in the altcoin space with Chainlink. This step could make Chainlink, considered one of the most critical infrastructures in the DeFi ecosystem, more visible in the institutional investment world.
Chainlink's Place in DeFi
Chainlink is known as the leading oracle network that securely connects blockchains with real-world data. Currently securing over $59 billion in value and used by over 458 protocols, Chainlink is positioned as the backbone of DeFi. This robust infrastructure allows both decentralized finance applications and tokenization initiatives to access reliable data. Its role in the tokenization of real-world assets (RWA), in particular, has recently increased institutional interest in LINK.
ETF Details
Grayscale's new product will be a modified version of the existing Chainlink Trust. The fund is planned to be listed on the New York Stock Exchange Arca under the ticker symbol GLNK. The filing also states that the fund will be staking-based under certain conditions. If tax and regulatory approvals are granted, a portion of the fund's assets will be staked, offering investors the potential for additional returns. The Custody service will be provided by the Coinbase Custody Trust Company.
The ETF is planned to be cash-based during its creation and redemption processes. This mirrors the structure of the spot Bitcoin and Ethereum ETFs approved in the US. However, if regulatory authorities allow it in the future, it could pave the way for in-kind (crypto-based) redemptions.
Competition is heating up
Grayscale's move isn't an isolated move for the market. Bitwise filed its Chainlink ETF application with the SEC last month. Giants like 21Shares, Franklin Templeton, VanEck, and Canary Capital are also lined up with other altcoin ETFs. Grayscale's Chainlink ETF initiative could mark a significant turning point in attracting institutional capital to projects beyond Bitcoin and Ethereum. If approved, this product would provide institutional access to LINK for traditional investors, bringing a breath of fresh air to both the Chainlink ecosystem and the broader crypto market.
At the time of writing, the Chainlink price is trading around $23.
