Grayscale Investments has officially filed with the U.S. Securities and Exchange Commission (SEC) to convert its Digital Large Cap Fund into an exchange-traded fund (ETF). This move would open up the fund to public investors, granting them access to a portfolio that includes some of the most prominent cryptocurrencies: Bitcoin, Ethereum, XRP, Solana, and Cardano.
Fund Composition and Performance
The Grayscale Digital Large Cap Fund, which currently stands at approximately $600 million, is predominantly composed of Bitcoin, which makes up 79.4% of the fund. Ethereum follows with 10.69%, XRP accounts for 5.85%, Solana is at 2.92%, and Cardano comprises 1.14%. Notably, Cardano was added to the fund in January 2025 after Avalanche was removed due to index rebalancing.
Since its launch in 2018, the fund has shown impressive growth, with its market price rising by 478.83%. However, it is only currently available to accredited investors through private placements, and the proposed conversion to an ETF would significantly expand access to the fund.
ETF Filing and Market Impact
Grayscale filed its request for ETF conversion with the SEC on April 1, 2025, using an S-3 form. If approved, the new ETF would offer exposure to about 75% of the digital asset market, excluding meme coins and stablecoins. The final management fee has not been disclosed yet, though it is expected to vary based on the final terms.
The move comes in the wake of the approval of Bitcoin spot ETFs in January 2024, followed by Ethereum ETFs and a hybrid Bitcoin-Ethereum fund. Grayscale’s filing highlights the growing interest in crypto ETFs, as they provide a way for retail investors to gain exposure to digital assets without directly holding them.
Competition in the Crypto ETF Space
Crypto ETFs have gained significant traction over the last year. U.S. Bitcoin ETFs now manage a total of $97.27 billion in assets, while Ethereum ETFs hold $8.59 billion, according to CoinGlass. However, Grayscale’s Bitcoin spot ETF has faced challenges, with over $15 billion in outflows, marking the largest ETF withdrawal since March 2009. This has led to concerns about the sustainability of Grayscale’s Bitcoin reserves.
The growing interest in crypto ETFs has also sparked issuers to explore funds tracking alternative cryptocurrencies such as Dogecoin, XRP, and Solana. In fact, speculation surrounding the launch of a Dogecoin and Donald Trump meme coin ETF has become a topic of discussion. However, a Myriad Markets poll suggests that 93% of voters believe the Trump meme coin ETF will not launch by the end of April.
The Rise of Crypto Index ETFs
As crypto ETFs gain in popularity, fund managers are increasingly focused on offering mixed crypto index ETFs. These funds track a diversified basket of digital assets, offering investors a more balanced approach compared to single-asset products. The SEC approved the first mixed crypto index ETFs in December 2024, sponsored by Hashdex and Fidelity, but these funds currently only include Bitcoin and Ethereum.
Crypto index ETFs are expected to provide greater efficiency for investors, much like traditional market index funds. Grayscale’s filing reflects this growing trend, as investors look for diversified exposure to a wider range of digital assets.
Regulatory Acceptance and Market Uncertainty
Despite the rapid growth of crypto ETFs, the market remains volatile, and uncertainty persists over long-term investor demand for digital asset funds. Nevertheless, regulatory acceptance of these products is on the rise, which could further stimulate institutional adoption.
Grayscale’s decision to convert its $600 million Digital Large Cap Fund into an ETF marks an important step in the broader evolution of crypto investment products. However, as with any financial innovation, the success of this fund will ultimately depend on ongoing regulatory developments and the market’s appetite for digital assets in the long term.
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