The US Securities and Exchange Commission (SEC) has approved Grayscale's conversion of its GDLC digital fund, which includes leading crypto assets such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, and Cardano (ADA), into a spot exchange-traded fund (ETF).
From crypto index fund to major ETF
The Grayscale Digital Large Cap Fund (GDLC) invests in the five largest cryptocurrencies by market capitalization, with a focus on Bitcoin, based on the CoinDesk 5 Index. The fund's asset allocation includes 80% Bitcoin, 11.4% Ethereum, 4.8% XRP, 2.8% Solana, and 0.8% Cardano. With SEC approval, this fund will now trade as a spot ETF on the New York Stock Exchange's Arca platform. This provides investors with access to cryptocurrencies through traditional stock exchange infrastructure, while the fund's daily trading mechanism will also increase liquidity.
Managing approximately $755 million in assets, GDLC has earned the title of “the world's largest multi-cryptocurrency ETF” with this transformation. This move paves the way for cryptocurrency investments to gain more legitimacy in the traditional financial world.
A critical development for XRP
The inclusion of XRP in GDLC's transition to a spot ETF is noteworthy in itself. Following the court's ruling that XRP is not a security in individual investor sales, marking a significant turning point for XRP in the years-long legal battle between the SEC and Ripple, this asset now offers direct access to investors as part of a regulated investment vehicle in the US. This development also sets a precedent that could pave the way for XRP-specific ETFs in the future.
Bitwise and other funds are next
Following Grayscale's ETF conversion, attention has now shifted to Bitwise. The Bitwise 10 Crypto Index Fund (BITW) is awaiting the outcome of its ETF conversion application submitted to the SEC. The fund includes assets such as Sui (SUI), Chainlink (LINK), Avalanche (AVAX), Litecoin (LTC), and Polkadot (DOT), in addition to Bitcoin, Ethereum, Solana, XRP, and Cardano. If approved, the Bitwise fund will also provide investors with access to a broader digital asset portfolio.
Following the ETF approval, the price of XRP rose by more than 6% to $2.30 in the initial phase. However, slight pullbacks were observed in other major cryptocurrencies. Bitcoin is trading at $106,280, while Ethereum is trading at $2,435. Despite this positive development, general uncertainty in the market persists. In particular, President Trump's new tariff plans, expected to be announced on July 9, and possible trade wars are important issues affecting investor sentiment.
Change in the SEC's stance
The SEC opened the door to crypto investment products by approving spot Bitcoin and Ethereum ETFs in 2024. Following these decisions, billions of dollars of new capital flowed into the sector. The recent approval of Grayscale's multi-asset ETF indicates that the agency has adopted a more constructive approach toward crypto assets. The increase in crypto-friendly policies during Mark Uyeda's tenure as interim SEC chairman may have accelerated this process.
